Enjoy reading our Online Mortgage Guide
In these pages you will find, for each issuer, specific information on the online mortgage offered, reviews and advice on the offer, as well as an institutional presentation of the product.
This guide will certainly help you in choosing your online mortgage .
Mortgages: what they are
When we talk about mortgages, in the first instance, we think of a form of financing that a private person asks the bank to buy a house . And indeed this is certainly one of the main applications of this important tool which also has a social as well as a financial value. The possibility of being able to easily access a mortgage, in fact, is considered one of the essential elements to provide support to the stability of young families, and it is therefore no coincidence that sometimes even the policy itself intervenes with measures in this sense. But the purchase of the main house does not exhaust the cases of application: a loan contract can in fact also be stipulated for the restructuring of a property, the purchase of a second home (for example for the holidays, or as an investment), or even for the construction of a building .
The subject or body that provides the loan (generally the bank) is called the lender , while the private or company that receives the money is the so-called borrowing party .
The principle is that typical of any form of loan or loan: the bank, or another accredited body, provides a sum that must be returned in an agreed period of time, in installments, and in an increased amount based on an interest rate default . But there are still some peculiar aspects of the mortgages that must be considered, and which we will see below, by analyzing the main elements of the mortgage in a simple way.
a) Mortgage guarantee
Let’s start with the mortgage guarantee because it is perhaps the main element that distinguishes the mortgage from other forms of financing. As we have said, generally a mortgage has as its purpose the purchase, restructuring or construction of a building. Moreover, the subject that provides any type of financing generally is concerned with the guarantee that the other can provide to protect the capital provided. Here, then, is that the choice in the mortgage is natural: the main guarantee provided is the building itself, on which a mortgage will then bear until the loan is settled, after which all the installments are paid.
b) Other guarantees
Sometimes the bank can ask for additional guarantees in addition to the mortgage on the building. This can happen for example if the bank believes that the income of the borrower is not high enough to guarantee payment of the installments determined on the basis of the interest rate applied. Or if the value of the property is not high enough in relation to the amount paid. In fact, in the event that the borrower is no longer able to meet the contractual charges (the payment of the installment) the bank will try to retaliate precisely on the property burdened by a mortgage: if the value of the latter is not high enough the bank would not be able to return the entire amount paid. Here, then, that in cases like these, the bank could ask for additional guarantees with respect to mortgage guarantees , for example the presence of a guarantor able to honor the borrower’s commitments in the event that the latter fails to do so.
c) Amount disbursed:
It is the sum that is paid by the bank: the maximum amount that can be obtained varies from case to case, and generally depends on the following factors:
- value of the property;
- income of the applicant;
- duration chosen;
- interest rate applied;
- guarantees provided;
- policies of the bank that provides the mortgage.
For example, if the applicant opts for a duration of 20 years, the bank will pay a maximum amount “X” based on the income declared by them. In the event that this amount is not sufficient for the purchase of the property, the borrower may choose a longer duration, eg 25 years, to get a higher sum. This is because by increasing the duration, at equal conditions, the installment decreases and therefore the amount that the bank can provide, consistent with the income of the applicant, increases.
d) Duration of the loan
The duration of a mortgage generally can range from 5 to 30 years, but in some cases it can also have longer durations. The choice is generally left to the borrower, but the banks do not always allow very long durations. Generally a longer duration allows lowering the installment, but the interest paid will be higher. A shorter duration means less interest to be paid, but with a higher installment.
e) Interest rate applied
As mentioned, against the disbursement of the loan amount, the borrower will have to pay, in installments, an increased amount, to cover the increase in the cost of money and the bank’s remuneration for the service provided. The size of this surcharge is given by the interest rate. The higher the interest rate, the higher this increase will be. Thus the interest rate is one of the most important parameters to consider when choosing a mortgage.
As you know, there are other important elements to consider when talking about a mortgage , such as the amount of the installment or the repayment plan. These elements are generally processed starting from the amount disbursed, the duration and the interest rate applied.
Write fragments in search of the truth. Like going to the bank and asking for a penny to be changed to a million dollars.