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5 Things About Mortgage Loans In Finance

5 Things About Mortgage Loans
March 02, 2021
Author : Andy

There might have been times when people require urgent cash. In those moments of crisis, being a homeowner is not less than any boon; simply applying for a mortgage loan is what can do wonders when in this situation. Mortgaging a property or any other expensive asset such as gold, car etc yields amazing returns as loan.

As a finance student, you might have come across many different types of loans such as personal loans, small business loans, home equity loans, credit card loans, mortgage loans and more. Among these, mortgage loans are the most beneficial for users. The reason behind this is when one takes a mortgage loan, he/she doesn’t have to bequeath the property ownership. Also, it is way easier to get the loan at a comparatively lower rate of interest in comparison to the other types of loans. Just like this, there are many other things that are not known to most of the people. For those of you, our finance assignment help will equip you with all you need to know about mortgage loans in finance.

There has been a tremendous change in the Mortgage in America. The era before the Great Depressions witnessed mortgages that had short maturity times as well as users needed to pay a large down payment for it. Also known as the Pre-depression mortgages, they characterised variable interest rates that had to be negotiated annually.

With the pressing needs of loans in today’s present context, mortgage loans have come as a rescue for a large number of people nowadays. Thus, it becomes imperative to know everything about mortgage loans as a finance student. Don’t worry, we will help you in this venture.

5 Mortgage types in canada

These are the five types of mortgages that you can take in Canada. Now, proceed further and understand all that you need to know about mortgage loans in finance.

Tracing The Evolution Of Mortgage Loans In Financial Markets

If we look at the evolution of mortgage loans, we would see it first in the time when the barter system had been started. People used to exchange a wide range of goods and services in return for what all they needed. For instance, exchanging some amount of crop for buying a hen so on. This was when money was not invented.

After the invention of money, people started pledging for their property in exchange for money. And when they would pay off the money, they would get back their property. Started from borrowing money from the richest person in an area, it later reached to co-operative societies and then to government-recognised banks. Today, every financial institution provides different types of mortgage loans. 

Interests Types On Mortgage Loans: An Overview

There are different ways of paying off mortgage loans. Being a finance student, it is imperative for you to be aware of them. Broadly speaking, our finance assignment help experts categorise the types of interests for mortgage loans into two main categories.

These are:

1. Fixed interest rate

When we opt for paying off the mortgage loan at a fixed rate of interest for the entire tenure of the loan, it comes under a fixed rate of interest. However, this is applicable to only those mortgage loans that have shorter tenures. In case, you want to take a mortgage loan for a long period of time, then it is not possible to pay it off using a fixed interest rate.

2. Floating rate of interest

This type of interest rate is dependent on market rates. A user who wants to pay off the mortgage loan using the floating interest rate doesn’t usually know the exact rate of interest but can have a fair idea of the existing interest rate from the website of the lender. This can vary depending on the rates prevalent in the market. The deciding factor for this is the Marginal Cost of Funds based Lending rate (MCLR).

These are the different types of interest rates for paying off mortgage loans.

What Is APR For A Mortgage Loan?

APR stands for the annual percentage rate and is not same as the interest rate for the mortgage loan. It is the total cost of a mortgage. This overall cost includes several other costs like closing costs, interest rates and more that comes within the loan tenure. One of the most important things that you need to know about mortgage loans in finance is calculating the annual percentage rate (APR).

calculating apr for mortgage loan

This is the formula that our finance assignment help experts use to calculate APR for a mortgage loan. It is significant for the lenders to disclose the annual percentage rate due to the Truth in lending act.

Have You Heard About Loan-to-value For A Mortgage Loan In Finance?

It is the value of the house of the borrower compared to the loan amount that you owe in the form of a mortgage loan. For example, if the amount of your home is $200,000 and you have taken a loan of $180,000, in this case, the loan to value would be 90%. This value is helpful for lenders to calculate the risk.

Did You Know Some Salient Features Of Mortgage Loans?

Another thing that you need to know about mortgage loans in finance is some features that would help you distinguish these loans from other types of loans.

  1. It depends on the lenders which type of property they want to accept
  2. Mortgage loans are customisable as per the needs of the borrower
  3. These are also known as ‘secured loans’ as the property is handed over to the lender just as a ‘collateral’
  4. You can take a mortgage loan having a long tenure up to 30 years, which can be paid off slowly in affordable EMI
  5. Generally, lenders only provide mortgage loans for those properties that are fully constructed.

canadian credit score

So, this is it. This is all you need to know about mortgage loans in finance. We have imparted all the requisites that are needed to write flawless finance homework assignment with ease. In the last ten years, we have tried our hands over a variety of assignments and created a large repository of reliable samples for you to hover over and use while writing your own assignments.

Let us present one such assignment file here.

A Finance Homework Assignment Sample On Mortgage Loans

Here is a mortgage loan in the finance assignment question received by our finance assignment help experts from students.

finance assignment question

The main objective of this assignment is to explain the finance and mortgage broking process to clients. In addition to this, we also need to highlight the background, role and credentials as a broker.

This is how we have written the answer to these questions for students.

finance assignment question2

Now that you know everything about mortgage loans in finance, it won’t be much of a problem for you to complete such homework assignments on your own. If you still feel perplexed, then you are always welcome to get in touch with our experts via the live one-on-one sessions and get the answers to all your queries instantly.

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About the Author

Andy

Andy

Andy Johnson has been offering finance assignment writing help to the students of the Australian universities. He started as a finance expert at one of the fortune 500 organisations. After a few years with his job, he realised that he wanted to aid students who are struggling with their daily academic needs and assignment queries. That’s when he came on board with My Assignment Services. His knowledge and skills have earned him quite a reputation with the students and professionals alike in the industry. He has qualified the CFP Certification Program.

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