In UK, a property loan is of two types.  One is where you could pledge your property to borrow some money from the bank.  Second is where you could apply for a home loan to buy a new property.  Loans of the second type are more popular in UK.  Property loans of the first type, also known as Mortgage Loans have been very popular in the United States of America.  Most leading banks in UK have started offering Mortgage Loans.

Let us discuss the Mortgage Loans in detail.

Mortgage Loans – In detail

Individuals apply for Mortgage Loans when they need money for emergencies.  These emergencies could be – Wedding, Educational expenses of child, starting a business or meeting hospitalization expenses.  In all these cases, the property papers are submitted to the bank.  Along with the papers, the individual also informs the bank on the amount he requires against the property.

The bank assesses the true value of the property also known as Market Value.  After taking various factors into consideration, the bank can approve the Mortgage Loan to the individual.  In doing so, the legal possession of the property remains with the bank till the time the individual pays off the loan.

Some banks give individuals a moratorium period.  During this period, the individuals would not need to make any repayments to the bank.  Considering the sensitive nature, banks normally stipulate a period of six months to two years as the moratorium period for individuals.

An individual can re-claim possession of his property only after the Property Loan is paid off in full.  In the interim, the individual would not have any legal right on the property.  If the person fails to make payments towards the Property Loan, the bank deserves the right to confiscate the property or attach the property.

Are Mortgage Loans healthy for a family’s financial health?

It entirely depends on the individual to maintain his family’s financial health.  He can do this by repaying the Property Loan in a timely manner to the banks.  Remember, failure in doing so can lead to the bank taking the possession of the property from the individual.

Pointers before applying for a Mortgage Loan or a Property Loan

• Please consider if you really need to pledge your property to meet the expenses.  Can you borrow some money from your relatives or take a personal loan to meet them?  Remember, your property is an asset that will be useful for you in years when you don’t have a home to live.
• Before applying for a Mortgage Loan, understand clearly that your property is being pledged.  The bank could take it away permanently if you do not repay their loan.