Lesson Progress
0% Complete

Loans With Collateral


We talk about loans without collateral, but what about loans that do? These will generally have lower interest rates, or even promotional interest rates. Housing loans, aka, mortgages, are a great example as they will usually come with a low interest. There are two major reasons for this. First, since a house is an asset that the bank can take back in the event of a default, they don’t take as much of a loss as a credit card would. Houses usually also come with hefty down payments of 20%, although down payments as low as 3% of the house worth can happen with mortgage insurance— that is, insurance a home buyer pays to insure the bank that they won’t lose money if there is a default..


  1. Collateral reduces interest rates, as there is less risk.

  2. Mortgages are safe, as the house works as collateral.

  3. Down payments typically go up to 20%!

  4. Can go as low as 3% with mortgage insurance