Loan with Mortgage and Mortgage Guarantee
Basically, these two types of loans require a guarantee of ownership; However, there are small differences between the two. The Mortgage Loan is generally of style, where the acquired dwelling is used as collateral against the loan, while the Mortgage Guarantee loan is where the existing property is used as collateral to request a second loan. Both are compatible legal means for the acquisition of funds.
The Mortgage Guarantee Loan
It is also known as the second mortgage is usually divided, depending on the country, into two categories that are the fixed rate loan and the mortgage credit lines.
The fixed rate loan offers a single one-time payment to the borrower who is repaid in a period of time as established, with the incorporation of the interest added to it. The amount of payment and interest applied remains fixed throughout the entire payment period.
As for the lines of mortgage credit
It works very similar to that of credit card advances. The extended amounts are fixed and can be withdrawn according to the needs of the borrower. Interest and refunds are not fixed and are calculated according to the current rates available. Payments are also paid only on the amounts withdrawn and not on the entire amount of possible advance, if not used in full, thus creating a simple and easy source of cash.
The Mortgage Loan is also a straightforward and fairly simple style of acquiring funds to ensure the purchase of the property. The risks of the lender are comparatively low since the amounts borrowed are generally lower in percentage to the real value of the property.
Borrower will be evaluated for their suitability and credit rating history
Before the loans are delivered. In this scenario, the lender is fully covered if the case of a default by the borrower occurs, the lender is able to collect the outstanding amount in the form of the property.