11 October 2010
Meaning of Home Loans
Whenever we hear about the term loan we usually understand that it is an amount taken at a present time for our needs, which has to be paid in installments over period of certain years. A loan is usually in terms of money as cash. There are different types of loans like home loans, medical loans, business loans, property loans, study loans, entrepreneur loans, needs like purchasing a flat, refurbishing our present home, purchasing a second home or just about any specific need under the sun! Loan can also be a boon during unexpected crises or emergencies in the family.
A loan is any amount taken or borrowed from a lender which has to be paid back along with certain amount of interest during the set period of time. It is an arrangement between two parties that is the lender and the borrower usually combined with interest at some future period of time. The lender has certain risk factors involved by lending the amount hence the interest charged along with certain documents or property or gold as mortgage. Mortgage is some asset which has a higher value than the loan amount taken. Here in case of default or the borrower not being able to pay back the loan the lender can take charge of the documents kept as mortgage. Interest rates of different lenders and financial institutions are different and it is always advisable to take a thorough survey of available options and their rates of interest before going in for home loan.
A home loan is an amount that is got by placing some valuable property or other investments as mortgage. Taking a loan and purchasing a home does not mean that the lender gives the total amount for purchase. This is the most important misconception amongst common people. A certain amount has to be given as down payment before hand and then the financial institution or bank can approve of loan for the rest of amount.