A bank loan, specifically a mortgage loan, is a sum of money borrowed from a financial institution to purchase property. The borrower agrees to repay the loan, along with interest, over a predetermined period. Mortgages typically come with lower interest rates compared to other types of loans due to the security provided by the property itself.

Benefits of Using Bank Loans for Property Investment

1. Increased Purchasing Power: Bank loans allow investors to acquire more expensive properties than they could afford with their own funds. This increased purchasing power enables investors to enter more profitable markets and potentially achieve higher returns.

2. Leverage: By using borrowed money to finance an investment, investors can amplify their returns. For example, if an investor uses a loan to purchase a property and the property appreciates in value, the investor can achieve a higher return on investment compared to using only personal funds.