Mortgage Loan refers to that kind of loan, in case of which you borrow money using your property as collateral. During the loan repayment term, the ownership of the property remains with the financial institution that lends you the money. Once, you pay back the whole loan amount, the mortgaged property comes under your ownership.

Different types of Mortgage Loans are available in the market. So, you as a borrower can choose that specific type of Mortgage Loan which suits your needs the best.

The Major two types:

Fixed Rate Mortgage Loans:

In case of this type of Mortgage Loans, the rate of interest payable on the loan remains fixed during the whole loan term. One advantage of this type of Mortgage Loan is that you know how much you have to pay every month and so you can plan in advance in terms of income and expenses. If you get a low interest rate at the time of entering the loan agreement and thereafter market interest rate rises, then you are obviously going to gain as you stick with the low interest rate in case of your loan. But, in the opposite case, if the market interest rate falls after you finalize your fixed rate Mortgage Loan, then you are going to lose as you will be paying loan interest at a higher rate compared to the prevailing market rate of interest. So, there are both pros and cons of a fixed rate mortgage. You have to consider the different outcomes and decide whether it suits you or not.

Adjustable Rate Mortgage Loans:

In case of this type of Mortgage Loan, the interest rate varies during the loan term. Adjustable Rate Mortgage Loans are available in different forms. Interest rate on the loan can fluctuate monthly or annually or semi-annually. There is also one type of Adjustable Rate Mortgage Loan, in case of which, the payable interest rate remain fixed for a certain period of time and then it starts adjusting with the market interest rates. Benefit of the Adjustable rate mortgages is that by choosing this type of loan you may qualify to get a higher loan amount. Moreover, as there is a chance that your monthly payment amount will go up when the market interest rate rises, there is also a possibility that your monthly payments will get reduced if the market interest rate falls.