Because the home loan is not backed by the home, if a borrower does not pay the home loan, the borrower won't have to give up the home; the borrower will just loose the stocks that guarantee the home loan. The lender company can't touch the home.

Hence this type of loans loans is a non-purpose loan, the borrower doesn't need to use the cash just for the acquisition of the house. He may decide to use the cash to buy a house, or to pay for a vacation or rental house, a higher education, invest on a corporation or any other use.

An asset based mortgage has normally a shorter life than a typical home loan. Depending on the bank you pick, the home loan could last 2, 3, 6 or even 10 years. This flexibility offers the borrower time to receive a longer term home loan.

In addition, this type of mortgage offers distinct types of payments. Depending on the lender, you may have monthly or quarterly payments. You might also have principal and interest payments or interest-only payments with a balloon payment at the end of the home loan.

The loan-to-value ratio has to do only on the quality of the assets given as a warranty. In other words, the higher the quality of the bond, the better the LTV you will have. For example, a home loan with stocks from Google as collateral will have a better LTV that if you were using a medium-sized corporation bond.

In addition, hence the stocks work as guarantee for the home loan, the borrower's quality and number of stocks are the solely decision for the approval of the home loan. Credit rating is of no significance. The borrower may have foreclosures and still easily qualify for the home loan.

At the end of the home loan, the borrower can select to renew it, or pay the mortgage off. If the borrower opts to pay off the home loan, the collateral are given back to the borrower.

Obviously, because this is a major economical decision, it's up to the borrower to learn as much as available on how an asset based mortgage works. Even though this is not the best home loan for every homeowner, it might be a useful financial tool for home buyers with many stocks but with a bad credit, or for those who desire to make sure that they are not taken out of their house even if they don't pay the home loan.