Cash loan or mortgage loan ? What to choose ?
Unfortunately, unexpected expenses have it to yourself that occur most often in the most suitable for this moment. If you’re wondering about the choice of a cash loan, know that mortgage loan is with great certainty favorable solution for you. Why?
Loan and the loan
The mistake is unfortunately common, interchangeable use of the term loan and the loan. There are in fact, although in some areas like two different financial products. Common features of both solutions is that the result is a debt that must be repaid by the borrower or the borrower. The difference between them is, inter alia, that the legal aspects of the credit issues are regulated by the banking law, while at the loan is the Civil Code. Another distinguishing feature of the loan is a loan that, in the event of the borrower’s loan funds are transferred his property, while in the case of a loan, they are only available to the borrower submitted to a specific time in the credit agreement.
The costs of both solutions
In addition to the above differences, these solutions also distinguishes their cost, especially when compared with will be subject to fees and charges associated with the granting of a cash loan and mortgage. Everything becomes clear after one glance at the so-called APR rate, which is the annual percentage rate – it is expressed as a percentage of the value of all mandatory costs (commission for granting, interest and other possible charges) credit and loans on a scale of one year. Indicator APRC for a mortgage is currently around 10-11 percent, while cash loans is he even twenty percent or more. To illustrate the differences in the price they pay for both tools is to use a comparison of the cost of a cash loan and mortgage loan in the amount of twenty thousand zlotys, granted for a period of 5 years – both liabilities will be repaid in equal installments on time. For the effective interest rate equal to 24% cash loan will be obliged to repay the monthly installments, the amount of which is about 549 zł. This makes it across the entire repayment – within five years – the cost of financing will reach 12.940 zł. For mortgage loan APR at 10.00%, the monthly installment will be for about 412 zł, making the total cost of financing will reach 4.720 zł.
According to the above example of the difference in the cost of the two products, as many as 8220 zł, which directly indicates the advantage of a mortgage loan as compared to cash. The difference in interest rates is due to additional mortgage collateral. Its establishment is equivalent to a reduction in credit risk, which allows you to minimize the cost reductions associated with the granting of funding. Although taking out a mortgage loan is equivalent to the borrower to incur additional costs – associated with the establishment of mortgages – it still remains favorable in relation to the cash loan.