Everyone has a dream house that they wish to live in but making this dream a reality costs a boatload of money, be it dollars or dirhams. Most people can barely save up enough to fund their deposit let alone buy an entire house. A mortgage loan is the most common solution for this problem. A mortgage loan allows the customer to borrow money to buy a home, with the property being taken as collateral. In this scenario, the loan agreement gives the lender the right to foreclose on your property if the repayments are not made on time. A mortgage loan does not necessarily apply to just homes. The terms mortgage and home loans are often used interchangeably but the difference is that “mortgage” refers to the agreement made before you acquire a home loan. Fixed-rate mortgages and adjustment rate mortgages (ARMs) are the most common for home buyers.
A mortgage loan is among the most financially stable ways to fund the purchase of your home. Most fixed-rate mortgages run for 15 or 30-year periods so the amount you pay back every month is affordable and manageable.
A mortgage loan typically has lower interest rates than any other loan as your property is the collateral. Whether you have a fixed-rate mortgage, where the interest rates remain the same for the entire period, or another type of mortgage, your interest rates are reasonable. There are also different mortgages available for first-time buyers, shared property and more.
- Improved credit score
Taking a mortgage loan and repaying it on time is guaranteed way to improve one’s credit score. A good credit score will enable you to get lower interest rates on future loans.
- Tax benefits
It is often possible for home owners to use their mortgage loans on their income tax benefits. Depending on where you live, the money you pay as interest may be excluded from the tax.
Although a mortgage loan can also have disadvantages such as long-time debt and hidden fees, it will not keep you from buying your dream house!
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