Mortgages (otherwise known as home loans) are an essential consideration for most people buying, selling or simply owning a home. While the concept of borrowing from a bank or lender appears simple at first, home loans can be a lot harder to understand than you might think.
However, Realestate.com.kh is here to help with our “mortgage matters” series.
And when you are ready to consider a loan more seriously, we can put you in touch with Cambodia’s most trusted lenders for full assistance with your mortgage preparations at realestate.com.kh/banks-finance/.
With a little extra homework, we believe that anybody can make sound financial decisions!
What is a mortgage?
A mortgage is a loan, quite simply, with your house and land used as security for that loan.
That means, if you don’t pay back the loan in the prescribed time frame, the lender (usually a bank) has the right to foreclose your home. Foreclosing means to take possession of a mortgaged property when the mortgagor fails to keep up their mortgage payments and sells that property to settle the debt.
The loan is secured by a “lien” (in other words, the “mortgage”) against the property in question (your house and land). The lender still doesn’t own the house or land, you do. But if you can’t pay, they have the lien with your house as their collateral/security. You still have full ownership rights – yet ar subject to satisfying the mortgage repayments.
When looking for your first mortgage it is most important to consider two things:
What can you actually afford to borrow, and what will the bank be willing to lend?
The lender/bank is never going to look at how much you spend in a month on partying with friends, movies and dinner or how happy you’ll be with a big payment! In reality, the bank may be willing to loan you considerably more than you think you can spend on your home mortgage.
You must consider this very seriously – because only you know how much flexibility your lifestyle and spending habits have, which ultimately determines how much you can afford when searching for a new home. If you miscalculate this and ask for more money than you really need, you risk not being able to satisfy payments and ultimately losing your new home.
A lender/bank will look at your income, and future-income-potential vs. your proposed debt, as well as your bank savings and credit history. Having considered these factors, the bank will then determine how much of a risk you are as a loaner.
Meanwhile, they also look at the value of the house you want to buy and potential-future-value and compare this against the interest rate of the loan you’ll be getting. After this analysis, the bank/lender arrives at a loan amount that they consider a healthy risk. If all things go according to plan, this loan amount will match (or potentially exceed) what you need to satisfy your down payment and the final price of the house you want to purchase.
Learn more and get in touch with the best home loan advisors today on http://www.realestate.com.kh/banks-finance/.