Unless you have a lot of cash in your bank account you are likely to require one of these mortgages in order to buy a property. There are several different types of home loan, each with advantages and disadvantages, and each is suitable for buyers in various financial positions. Each sort of loan has varying terms and conditions attached to it.
One of the most popular type of home loans is a fixed term product. For this a set interest rate is charged on the amount borrowed for the entirety of the loan. This is great if you need to budget for your payments but you could end up paying high repayments even when national interest rates are low.
An adjustable rate mortgage also has a fixed interest rate but usually for a much shorter period, often of about five years. After this period the rate will adjust in line to a market index. This type of borrowing is often riskier, however to counterbalance this, lenders will often give far cheaper rates for the fixed term.
For those who can not afford large monthly repayments immediately but who know they are going to come into a large sum of cash in the future, a balloon loan could be suitable. Over the whole loan term you only make monthly payments on the interest that is charged. By the time the loan is completed you will need to have the money to pay off the whole borrowed amount.
At times in your life you may need to get your hands on a large amount of money for an emergency. If your home is already owned outright you could use it as collateral for an equity loan. The interest on these is much lower than the charges on a regular loan or a credit card, however if you do not keep up the repayments the lender could repossess your property.
Try not to get bewildered by all the choices for mortgages. A mortgage expert can help you work out what is right for you and help you to file all the paperwork.
One of the most popular type of home loans is a fixed term product. For this a set interest rate is charged on the amount borrowed for the entirety of the loan. This is great if you need to budget for your payments but you could end up paying high repayments even when national interest rates are low.
An adjustable rate mortgage also has a fixed interest rate but usually for a much shorter period, often of about five years. After this period the rate will adjust in line to a market index. This type of borrowing is often riskier, however to counterbalance this, lenders will often give far cheaper rates for the fixed term.
For those who can not afford large monthly repayments immediately but who know they are going to come into a large sum of cash in the future, a balloon loan could be suitable. Over the whole loan term you only make monthly payments on the interest that is charged. By the time the loan is completed you will need to have the money to pay off the whole borrowed amount.
At times in your life you may need to get your hands on a large amount of money for an emergency. If your home is already owned outright you could use it as collateral for an equity loan. The interest on these is much lower than the charges on a regular loan or a credit card, however if you do not keep up the repayments the lender could repossess your property.
Try not to get bewildered by all the choices for mortgages. A mortgage expert can help you work out what is right for you and help you to file all the paperwork.
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