Mortgage is a debt instrument in which the borrower guarantees immovable assets such as houses, land, shops, buildings, apartments, etc., and must be paid/installed and paid off in accordance with a predetermined time. Mortgage can also be interpreted as a long-term debt / credit instrument guaranteed by immovable assets with a written agreement.
Mortgage Schemes
In purchasing property, be it residential, apartments, shops, etc., payments will be financed by a bank, so the purpose of mortgages is to help the less fortunate to own property by installments guaranteed by a property certificate. so the recipient of the mortgage will pay the principal amount in installments in a tenor (5-15 years) plus interest.
Mortgage Types
Based on the application of interest rates, mortgages can be grouped into the following types:
1. Fixed Interest Rate
Interest and installment amounts are paid in a fixed amount every month by the borrower/debtor, for a certain tenor until paid off.
2. Adjustable Rate Morgage (ARM)
Interest will change (floating interest rate) in accordance with the current interest rate, so that it can change at any time according to the economic conditions of a country. ARMs are also known as money market mortgages.
3. A balloon mortgage
The first interest rate is low and will increase according to the agreement up to a certain limit. In general, this type of mortgage is applied to mortgage buyers with higher incomes at the end of the loan term.
Advantages of the Mortgage System
Allows people with middle to lower incomes to own property by credit (in installments). Mortgage buyers only need to pay a down payment and monthly installments plus interest. Property purchased directly can be occupied (inhabited) or used as a place of business. If for some reason and circumstances the mortgage buyer is bankrupt etc., then he can sell the mortgage debt to someone else (over credit).
Disadvantages of the Mortgage System
Complicated requirements, minimum income/salary. Property prices will be double that we buy in cash.
Mortgage Schemes
In purchasing property, be it residential, apartments, shops, etc., payments will be financed by a bank, so the purpose of mortgages is to help the less fortunate to own property by installments guaranteed by a property certificate. so the recipient of the mortgage will pay the principal amount in installments in a tenor (5-15 years) plus interest.
Mortgage Types
Based on the application of interest rates, mortgages can be grouped into the following types:
1. Fixed Interest Rate
Interest and installment amounts are paid in a fixed amount every month by the borrower/debtor, for a certain tenor until paid off.
2. Adjustable Rate Morgage (ARM)
Interest will change (floating interest rate) in accordance with the current interest rate, so that it can change at any time according to the economic conditions of a country. ARMs are also known as money market mortgages.
3. A balloon mortgage
The first interest rate is low and will increase according to the agreement up to a certain limit. In general, this type of mortgage is applied to mortgage buyers with higher incomes at the end of the loan term.
Advantages of the Mortgage System
Allows people with middle to lower incomes to own property by credit (in installments). Mortgage buyers only need to pay a down payment and monthly installments plus interest. Property purchased directly can be occupied (inhabited) or used as a place of business. If for some reason and circumstances the mortgage buyer is bankrupt etc., then he can sell the mortgage debt to someone else (over credit).
Disadvantages of the Mortgage System
Complicated requirements, minimum income/salary. Property prices will be double that we buy in cash.
