A home loan, also known as a mortgage, is a type of loan provided by banks or financial institutions to individuals to help them purchase or refinance a residential property. Home loans are a long-term borrowing option and are secured by the property being purchased or refinanced. This means that if the borrower fails to repay the loan, the lender can take possession of the property through a process called foreclosure.

• Collateral: The property being purchased or refinanced serves as collateral for the loan. This collateral gives the lender security, reducing the risk and resulting in lower interest rates compared to unsecured loans.
• Loan Amount: The loan amount is usually a percentage of the property’s value, known as the loan-to-value ratio (LTV). Borrowers are required to make a down payment for the remaining portion of the property’s cost.
• Repayment Terms: Home loans typically have longer repayment terms, often ranging from 15 to 30 years. Borrowers make monthly payments, including both principal and interest, over the loan’s duration.
• Fixed or Adjustable Interest Rates: Home loans can have either fixed interest rates, which remain constant throughout the loan term, or adjustable (variable) interest rates, which may fluctuate based on market conditions.
• Mortgage Types: Different types of home loans are available, including conventional loans, government-insured loans (e.g., FHA or VA loans), and jumbo loans for higher-priced properties.
• Application Process: Home loan applications involve a thorough review of the borrower’s credit history, income, employment status, and financial situation.
• Homeownership Benefits: Home loans enable individuals to achieve homeownership, build equity, and enjoy potential tax benefits related to mortgage interest deductions.
• Prepayment and Refinancing: Some home loans allow borrowers to prepay or refinance their loans, providing opportunities to save on interest or adjust loan terms