Mortgage loans are usually taken out to purchase a home. The loan proceeds can be used for a variety of other purposes too. Since a mortgage loan uses property as collateral, the mortgage loan proceeds should be used very judiciously. Here we discuss about some of the ways that a mortgage loan should be utilized other than purchasing a home.
Debt consolidation
The mortgage loan proceeds can be utilized for debt consolidation. The rate of interest associated with unsecured debts is comparatively higher than the rate associated with a secured debt. So, sometimes it makes sense to use the mortgage loan proceeds for debt consolidation purposes.
Setting up a business
Business loans offered by the banks and the lending institutions carry high rate of interest and moreover these are generally short duration loans. By mortgaging a property, you can obtain a mortgage loan and you can use the funds to start a business.
To meet medical contingencies
Nothing is more precious than life. Medical emergencies may occur at any time. In order to meet the medical bill, you can use the mortgage loan that you have taken out.
Home improvements
You can use the mortgage loan proceeds for home improvement purposes. Improved home means higher value of your house.
Education of your children
You can use the mortgage loan for the education of your children. It indeed makes sense as education of your children is an investment which is likely to fetch long-term benefits.
Apart from home purchase, these are some other uses of a mortgage loan.