A mortgage is an interest for land made by an agreement, not an advance. Albeit practically all home loan arrangements contain a guarantee to reimburse an obligation, a home loan isn’t an obligation by and in itself. Here is everything you need to know about mortgage loans.
Reverse Mortgage
The reverse mortgage, although unknown to many, has been popularizing in recent years. It is a formula for the elderly to supplement their pension through a mortgage on their house.
The owner of a home free of charge will ask an entity for a loan with a property as collateral. In exchange, the bank will pay month after month an agreed amount during a period. Once the time comes to finalize the mortgage payment, the client will have two options: return what has been paid or give the property to the lending entity.
Bridge Mortgage
Through the bridge mortgage, the client can obtain financing to acquire a second property. This type of loan is usually requested among families looking for a better home and still paying the previous mortgage. Through this product, the client will have the possibility of having both mortgages (that of the old house and that of the new one) until the first house is sold.
With this, the mortgaged will only have to pay a single fee and not face two different loans. Of course, we will have to assume the commitment to sell the old home in a specific period that will be agreed with the entity.
Subrogated Mortgage
When the mortgagee wishes to improve their loan and reduce their amount owed, they can go to another financial institution and get more favorable loan conditions. It is known as subrogation for bank change.
For this, the client must visit another lender that delivers a binding offer. If the mortgage payor considers it better, the loan’s subrogation will be signed before a notary, paying the new bank the outstanding debt and becoming the mortgaged one’s new debtor.
With this change, the client can benefit from a change in the operation’s conditions and the repayment period without incurring taxes. However, it must assume the expenses that this operation implies, such as notary, agency, or registry, among others.
Multi-Currency Mortgage
The multi-currency mortgage is a type of loan with the same characteristics as a normal mortgage loan. The only difference is that it allows the currency to change the outstanding debt at certain agreed time moments.
In general, stable currencies with low-interest rates such as the yen, Swiss franc, American, Australian, or New Zealand dollar, sterling, and the euro are usually used. Although paying the mortgage with interest from other countries may be cheaper on certain occasions, the fact is that fluctuations can seriously affect the mortgaged if you do not know the foreign exchange market. If the currency to which the mortgage is referenced is revalued, the outstanding capital could increase.
Debt Reunification
The reunification of debt does not imply the sale of a property by the mortgaged party. With this product, what is sought is to pay the installments of several debts and loans in a unified manner by guaranteeing a home free of charges.
The client will pay a single mortgage payment through two options: increasing the amortization period of the mortgage loan that he already has subscribed to or asking his entity for a mortgage on a home he already has to pay off his debts.
In the first case, you must renegotiate with your bank to extend the maturity term and assume that the monthly fee will be somewhat lower to deal with it more easily. In the second, the client will choose to mortgage his house to cancel the debts he already owns. In return, you must pay a monthly fee to the bank during the period you agree with the entity.
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