The word mortgage usually puts the idea of a home mortgage in our head but in fact the word mortgage is used for any collateral that is used to take a loan. Generally the collateral used as a mortgage is a property and it can be a piece of land or a house etc. When you are taking a loan the lender will have more confidence in you only if you provide him with a security that the loan will be paid back. It is common for unsecured debt to be more expensive and the reason for that is obvious. The more risk you will associate with yourself as a borrower the costly the loan will be for you. As mortgages are secured loans they are not very expensive unless you have a bad credit history or other factors affecting your reputation as a borrower. Mortgage lenders have the arrangement of thoroughly checking you as a borrower in terms of your personal details and your financial details. The most obvious financial record that is used before lending money to an individual or business is the credit rating. A person who has successfully maintained a healthy credit rating earns the honor of getting a low interest rate charged on his loan. Credit ratings are readily available on the internet and whenever you consult a lender to check the possibility of a loan and they run a reference check or credit check on you it shows on your credit report.

Mortgages are usually used to purchase land and the same property that is being purchased is used as a security or collateral. The duration of a mortgage loan is stretched over many years. Some loans last for up to 30 to 35 years in fact 30 years are a common duration of a home mortgage in US. Both domestic and commercial land purchases are done with the help of mortgages. The mortgage rates for a commercial loan are usually more as compared to domestic loan and the duration of the loan is also longer for commercial loans. The domestic markets in US and UK are very dominant and strong. These countries offer home purchases that are funded by loans and the security is provided by the property that is being bought. A typical home mortgage will be owned by a person who will lose his house if he does not pay back the loan. The interest rate on the loan will depend on the home owner’s credit rating and the value of the house. Many mortgage companies today require the home owner to take home insurance. This puts the bank or mortgage company in a better position and makes their money safer.

Mortgage loans can be applied for on the internet and many banks and mortgage companies allow you to fill in an initial application on their website. A simple form requiring your personal as well as financial information is filled in on the website and the interest rate for the loan that you may get and the pay back annuity chart can be generated using the mortgage calculator on these sites. Mortgage loan payments have a heavy weight on your credit rating as the sum of the loan is huge. Mortgage calculators give you a chance of not taking a loan that you can not pay back on a regular basis. Still if you are missing monthly payments of your loan your credit rating will be affected.

An interest only mortgage is easier to pay back as for the initial five to ten years the borrower is required to only pay the interest on the loan. If you think that you can not pay both the interest and the amortized principal you should opt for interest only mortgage.