The concept of mortgage guarantee is fairly new to Indians. And to understand this novel theory, here is an overview that will give you brief information about the features and the advantages of Mortgage Guarantee Home Loan: What is Mortgage Guarantee Home Loan? Mortgage guarantee is also known as mortgage insurance. This is a type of insurance product that covers the risk on a home loan. This cover is provided to various lending institutions like housing finance companies and banks. It mainly covers the risk in case the home owner gets injured, becomes default on payments, suffers from a kind of fatal disease or even dies because of i In a mortgage guaranteed home loan scheme, the lender is partly insured against the loan by the borrower. Some of the major features of Mortgage Guarantee Home Loans are like longer tenure, higher LTV (Loan to Value), and therefore a higher loan amount. Such features take a lot of burden off the borrower’s shoulders.
The Theory behind Mortgage Guarantee Home Loan Offering a long-term loan increases the risk for the bank, especially when the loan tenure extends over the borrower’s retirement age. Thus, to ensure that the home loan does not extend to a higher age, the bank and finance institutions provide lower loan amount and a higher EMI to the borrowers if they are applying for the loan in their late thirties or early forties. Moreover, in the majority of cases, banks offer lesser tenure loans for self-employed people as compared to the salaried employees. This practice makes it extremely difficult for the borrowers to meet their actual loan requirements. As a result, the borrowers are forced to apply for personal loans that come with a heavy interest in order to accumulate sufficient funds to support the purchase of their house. But, a mortgage guarantee home loan supports such borrowers and aids them in the purchase of the dream home. We hope that this information will help you understand the concept of Mortgage Guarantee Home Loan better.
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