To finance the purchase of a home, you can take out a mortgage. You then borrow money from a financial institution. Naturally, this amount will have to be repaid sooner or later. In addition, you must pay interest on the borrowed amount.
A mortgage differs from other loans in an important way. The interest is tax deductible under certain conditions. Your house serves as collateral. The lender has the “right of mortgage” on your house. If you can no longer pay your mortgage payments, your home may be forced to sell. You must first pay off the mortgage debt from the proceeds. This is the basic principle of all mortgage types.
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