A mortgage loan (abbreviated as mortgage) is a bank loan secured by a lien on real estate, which is most often used to finance the purchase, construction or reconstruction of real estate intended for one’s own home. A mortgage loan is granted by a bank and very often people arrange it through mortgage brokers or financial advisors. Czechs can also arrange a mortgage loan online using the mortgage banking portal hyponamiru.cz.
Purpose-built mortgage loan
A mortgage loan can be either purpose or non-purpose. In the Czech Republic, the majority of loans granted are special-purpose loans. In the case of a special-purpose loan, the bank specifies exactly what the money can be used for. People most often use a special-purpose mortgage to buy a flat, a family house, a building plot, to finance the construction of a property or its extension, extension or extension. Mortgage loans are also often used to finance renovations, upgrades and repairs to older properties.
The mortgage can also be used for:
- purchase of a share of real estate in order to settle co-ownership and inheritance shares,
- division of the matrimonial property,
- purchase of the cooperative share and payment of the membership share,
- refinancing of an existing special-purpose loan.
Non-purpose mortgage loan
A mortgage loan can also be non-purposeful, which means that the borrowed money can be used for anything against the mortgage of a suitable property. This type of loan is known as an American mortgage. People can pledge their own home to the bank, for example, and use the borrowed money to finance their children’s studies and college abroad. An American mortgage carries a higher rate of interest than a conventional purpose-built mortgage.