The mortgage loan is primarily addressed to the group of clients who are the owners of an unencumbered mortgage, which will become collateral for the loan granted by the bank.
A mortgage is most often associated with a service that is the same or very similar to a mortgage. However, this is wrong thinking, and as a bank customer you must be aware that a mortgage is an offer that will interest more people who want to raise additional funds for any purpose, such as cash loans or consumer loans. However, this product is so specific that we cannot compare it with those traditional debts for customers who need fast cash without specifying a specific destination.
The offer is dedicated to a smaller group of recipients. However, it should be remembered that due to specific requirements, a cash loan under a mortgage can offer a much lower cost of credit.
What makes a mortgage different?
The mortgage loan is primarily addressed to the group of clients who are the owners of an unencumbered mortgage, which will become collateral for the loan granted by the bank. However, before we receive cash, it will be necessary to evaluate the property, which will allow the institution to determine the amount we will receive as part of the debt. It will not be an amount covering 100% of the value of our house or apartment, but we can count on money from 50% to 80% of the total value determined by the appraiser.
Another characteristic feature is that, unlike the aforementioned credit and cash loan, it is a debt that will require at least a few or several days before we receive money. It is caused by a number of procedures connected with granting this type of loan. You should remember about the need to provide a certificate of income received, formalities related to the court, home valuation, settlement of accident insurance or life insurance, the assignment of which will be received by the bank. The necessary documents will effectively postpone the time when we can enjoy the borrowed cash. However, this is the price we will pay for a very attractive bank offer regarding a large amount of cash, which can be repaid up to 20 years.
The undoubted advantage of a mortgage is that its interest rate is low. Most often it is little more than cheap mortgages. Therefore, it is often only half of the costs borne by clients who decide to take a cash loan. Therefore, it is a service that is recommended to people who do not want to get cash quickly, but want to save and pay low interest, without risking additional fees.
Mortgage – what can you spend your money on?
As mentioned before, a mortgage allows you to meet any of your financial goals. This is money that the borrower receives without having to certify for what purpose it will be used. Therefore, we can both buy new equipment and a car, and finance a vacation or a long-planned renovation. We have full freedom in the use of funds received and it depends on us how we will manage these additional funds in the family budget. However, it is worth thinking about it earlier so that you do not regret your choices later and have no problems when paying off your debt.
As in the case of a cash loan, the customer will have complete freedom in disposing of the funds received. That is why many people who decide to do so even use it for several purposes at the same time. Nothing prevents you to finance and carry out renovation, buy new furniture for the apartment, and spend some money on your dream trip abroad.
Cash loan or mortgage loan?
Not sure which of the offers should help you get the additional funds you need? It is worth remembering the pros and cons of both debts. Thanks to this, it will be much easier to adapt the offer to your preferences and sign a contract that will meet all your expectations, guaranteeing conditions that you can easily meet during the loan period.
Advantages of a mortgage loan:
Very low cost of debt
You can use the money for any purpose
The loan is secured by a mortgage
High maximum amount of debt – depending on the value of the property
Disadvantages of a mortgage loan:
Access to money only after a few days of submitting the application
The offer is directed only to selected recipients
Advantages of a cash loan:
Quick access to cash – even within one day of signing the contract
The offer is addressed to all interested parties
Loan for any purpose
Disadvantages of a cash loan:
Higher cost of debt
No collateral loan
The maximum loan amount depends on the recipient’s creditworthiness
Choosing the best financial service is not as easy as it may seem. It turns out that each of the services can offer something completely different. It is up to you to decide which commitment is the right one. It is especially important to consider the overall cost of debt and how quickly you will receive the money. If you only care about minimizing the cost of the loan, then a mortgage loan will be a solution that will be perfect for you. However, if you care more about instant access to money, and your plans are to reduce the number of formalities related to credit, then a cash loan may be just what you are really looking for.