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A mortgage is a personal loan that you take out to purchase your home, and is the way for many to achieve their goal of property ownership. In Nigeria, mortgages are available both through banks and the country’s National Housing Fund.
The mortgage loan is made up of three components: principal, interest and collateral. The principal is the amount of money you are borrowing to purchase your home. Interest is the annual rate you pay to borrow the money – calculated as a percentage of the total principal. Collateral is the asset or assets used to secure the loan.
When you apply for a mortgage, you pay a portion of your monthly paycheck to the lender or bank that has made your loan. The loan’s collateral is the home you have purchased with the proceeds, meaning that if you are unable to make payments, the lender is legally allowed to repossess that property to cover their expenses.
In many cases, when you are given a mortgage, you are also required to take out an insurance policy on the property you have purchased. Either way, know that CompareGuru has you covered!
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