Write A Note On Mortgage Market and Types of Mortgages in Pakistan?
Write A Note On Mortgage Market and Types of Mortgages in Pakistan?
Write A Note On Mortgage Market and Types of Mortgages in Pakistan?
Submitted by:
Ahmed Raza 19816620-008
Hasnain Abdul Haleem 19016620-045
Syed Ali Hamza 19016620-035
Assignment # 3
Write a note on Mortgage Market and types of
mortgages in Pakistan?
Mortgage:
A mortgage is a loan – provided by a mortgage lender or
a bank – that enables an individual to purchase a home or
property. While it’s possible to take out loans to cover the entire
cost of a home, it’s more common to secure a loan for about
80% of the home’s value.
Types of Mortgages
Mortgage Payments:
Mortgage payments usually occur on a monthly basis and
consist of four main parts:
1. Principal
The principal is the total amount of the loan given. For example,
if an individual takes out a $250,000 mortgage to purchase a
home, then the principal loan amount is
$250,000. Lenders typically like to see a 20% down payment on
the purchase of a home. So, if the $250,000 mortgage represents
80% of the home’s appraised value, then the homebuyers would
be making a down payment of $62,500, and the total purchase
price of the home would be $312,500.
2. Interest
The interest is the monthly percentage added to each mortgage
payment. Lenders and banks don’t simply loan individual’s
money without expecting to get something in return. Interest is
the money a lender or bank earns or charges on the money they
loaned to homebuyers.
3. Taxes
In most cases, mortgage payments will include the property tax
the individual must pay as a homeowner. The municipal taxes
are calculated based on the value of the home.
4. Insurance
Mortgages also include homeowner’s insurance, which is
required by lenders to cover damage to the home (which acts as
collateral), as well as the property inside of it. It also covers
specific mortgage insurance, which is generally required if an
individual makes a down payment that is less than 20% of the
home’s cost. That insurance is designed to protect the lender or
bank if the borrower defaults on his or her loan.
Thank you