A mortgage loan is a loan taken out against the property that a person owns. Banks and other non-banking finance companies offer these loans. A person can repay the loan in monthly instalments. The lender has a right over the borrower’s property until the borrower pays the loan. If the borrower cannot pay the loan, the lender can seize the property and auction it. The mortgage loan singapore provides loan to people and provide interest on it.
What is a mortgage lender?
A lender is a financial institution or bank that offers loans to the people after buyers provide their immovable assets. Lenders have specific borrowings guidelines to check whether the person is creditworthy or not. On this basis, they give loans to their borrowers. They set the amount for the interest rate and the repayment schedule.
Who is a mortgage broker?
They work as an intermediary between the borrower and the lender. A mortgage broker does not control the borrowing guidelines, interest rates, etc. Brokers are the professionals who help borrowers collect their applications and prepare their documentation to increase the chances of approval from the lender. They are the means of communication between the borrower and the lender. Many brokers work with a mortgage company and help the borrower find the best deal according to their budget.
When a mortgage broker pairs the lender and borrower, their roles stop there only. They don’t have control over the process of the loan. Sometimes, the lender charges a higher interest rate to cover the broker’s commission.
Mortgage payments must be made every month. These payments consist of four parts:
- Principal amount: It means the total amount of the loan. A person must make the down payment first.
- Interest rate: It is additional. The amount charged on the principal amount. Interest can be higher or lower. On mortgage loans, it tends to be lower.
- Taxes: Mortgage loans charge taxes such as property tax, which an individual must pay.
The mortgage loan singapore provides the loan to the borrower after taking their property temporarily. If a person does not pay the loan to the lender, the lender will seize their property and auction it to get their money back. A mortgage broker plays a significant role. They pair the borrower and the lenders. They do not play a role in providing interest rates or loans to the borrower. The lender does this work.