A mortgage is a type of loan specifically used to purchase a house, apartment, commercial unit or land. It's a long-term loan provided by a financial institution, typically a bank or a mortgage lender, to help individuals or businesses buy property.
Mortgages allow individuals or businesses to afford homes or properties they might not be able to pay for in cash up front. They provide the opportunity for homeownership while allowing borrowers to spread the cost over an extended period.
Your home maybe repossessed if you do not keep up repayments on your mortgage or other loans secured on it.
Loan Amount: The mortgage lender provides the borrower with a specific amount of money to purchase the property. This amount is typically a percentage of the property's purchase price, known as the loan-to-value ratio.
Interest: Borrowers pay interest on the loan, which is the cost of borrowing the money. The interest rate can be fixed (stays the same throughout the loan term) or variable (fluctuates based on market conditions).
Repayment Period: Mortgages have a defined repayment period, during which borrowers make regular payments (monthly) to repay the loan plus interest.
Deposit: Borrowers usually need to put down a deposit, which is a percentage of the property's purchase price paid upfront. The deposit can vary, depending on who the lender will be.