6 Must-Knows About Home Mortgages
Crunching numbers isn’t for everyone, but there are still a few things you should know about mortgages.
15:41 18 March 2013
When you’re looking for a home mortgage, you will no doubt be faced with numerous choices in funding. This can be extremely tricky and an independent mortgage broker should be able to help you with a decision. Here are a few general pieces of information so you can start your planning.
- Interest only home mortgage—this type of mortgage may seem great due to a lower monthly payment but beware! Once the interest has been paid, the principle or capital is due in full. Find out if there is flexibility in repayment in the event of unforeseen circumstances.
- Fixed rate mortgages—these mortgages offer a fixed rate for a certain period of time. Consider what happens once the rates increase and if you’ll be penalized for moving to a different company or other mortgage plan later.
- Capped rate home mortgage—this type of mortgage has a cap, but unlike the fixed rate mortgage, if rates fall you’ll benefit from receiving the lower rate.
- Variable rate mortgages—the home mortgage payment would fluctuate according to the current interest rate trends.
- Endowment mortgage—an endowment policy is used to provide life insurance and to save funds for repayment of the loan at the end of the term. This can be risky since it depends on investments.
- Repayment home mortgage—this popular choice involves monthly payments which pay off some of the principle as well as some of the interest, but the home may be repossessed if payments lapse so check into mortgage insurance with this option.
Once you’ve compared all the different plans, interest rates, and repayment options you will hopefully be able to choose the option that works best for your own unique situation.