If we intend to buy a house, in this time of rising interest rates, we are probably asking ourselves: is a mortgage or loan worthwhile for the purchase of the house?
Let’s see in the article what are the pros and cons of buy a house without a mortgage asking for a loan.
Mortgage or loan? there are differences, what changes
What is the difference between mortgage and loan? There are three basic distinctions between the two
Real estate guarantee: while an asset is requested as a guarantee for the loan for the loan, this is not the case for the loan.
Duration: while the mortgage can go up toeven at 30-40 yearsthe loan rarely exceeds 120 months.
Amount: the mortgage usually covers up to 80 percent of the value of a property, and sometimes up to 100 percent; therefore they also exist mortgages of 200-250 thousand euros. A loan provides for lower amounts, even less than 100 thousand euros.
What are the guarantees between mortgage and loan?
Buying a house with a mortgage or loan implies a different type of guarantees required by the bank or financial institution. These too must be evaluated to decide how to buy a house.
The guarantees required to grant a mortgage I am:
mortgage on the underlying property, the presence of a income regular, possibly coming from a permanent contract. In the absence of these conditionsa ensures that it takes care of the payment of the loan in the impossibility of the holder to satisfy it;
policies insurance policies that protect against loss of work or even in the event of death, an event that jeopardizes the repayment of the loan.
For the request of a personal loaninstead, the required guarantees are much milder: basically it is enough to have a demonstrable income e never have been reported as bad payers.
When is a mortgage or loan really worth it?
So when is it convenient to apply for a mortgage and when to take out a loan?
Generally it depends on ours starting financial availability. A loan can be useful if we already have part of the sum for our spending and we just have to integrate it, with the certainty of repaying the sum in a short time. A mortgage, on the other hand, is more useful for longer-term projects and when we have little liquidity to advance.
You can also decide to buy a house with a mortgage if you want to keep liquidity for other investments, deciding instead to take out a mortgage loan at rates that are still affordable.
However, to determine if it is better to buy a house with a mortgage or financing there is also the ability to provide the required guarantees, elements that they depend on one’s income and job position.
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