In order to understand what is still more profitable, you need to deal with the concepts of «Mortgage» and «Consumer Credit», and the most important thing to understand the difference.
Consumer credit is a loan for individuals or legal entities, in this case the bank (creditor) gives a certain amount of funds for the purchase of goods, services, works, and so on.
With a mortgage loan, it is no longer just about the loan, but also about a pledge, under which cash is issued.
In this case, we are talking about real estate on which the temporary burden is superimposed until the debt is repaid before the Bank.
Now let’s try to compare the same aspects in each of the situations relating to the mortgage and consumer loan.
To get a mortgage, the borrower requires an initial contribution. Of course, this is not always happening, but thus the borrower provides a smaller monthly payment or the term of the oscillate.
Consumer credit, in turn, is issued without any initial contributions.
In the mortgage loan, the deposit of property is obligatory, we have already mentioned this, while there is no such mandatory condition in the consumer loan. In this regard, the consumer loan wins the mortgage, because it is much more pleasant to know that your property is in absolutely your disposal.
In this case, you even retain the possibility of real estate to another person, including a child. And in the case of financial problems, this housing will not suffer from arrest.
But the lack of collateral significantly increases the risks, so the bank usually offers a bet higher than when mortgage.
It is also worth noting that the loan period is significantly different. Mortgage can be paid up to 30 years, while a consumer loan is not issued for such long terms.
In this case, we have a smaller payment when mortgage, and a higher consumer loan.
Continuing the topic of deadlines, it is worth noting that the mortgage design takes longer than the design of the consumer loan. Such an aspect concern for mortgage lending is associated with a long search for suitable housing, the conclusion of the contract of sale and related actions related to the design of real estate.
It is also worth not to forget about the preferential mortgage for certain categories of citizens. Some programs can be very beneficial for you, include a minimum loan rate or additional subsidies for the payment of the Mortgage Credit. In this case, the state helps very well in this matter to young families, families with children, doctors, teachers, military personnel, residents of the Far East and so on.
But it should be noted that almost always when making a mortgage loan, the Bank imposes additional insurance in favor of a decrease in a percentage of the loan. On the one hand, it saves your money, so payments are less, but on the other hand, these additional monthly spending can hit the pocket.
In consumer credit, insurance is a voluntary service that is provided at the request of the borrower. Therefore, you can refuse to acquire insurance, but do not forget that the bank can refuse to you in the loan.
As you see the mortgage has a large number of advantages over consumer loan, but also the minuses too, so choosing between two products, it is worth weighing everything «for» and «against».
If you find it difficult to determine the choice of loan for the purchase of housing, then