Mortgage Loans

Mortgage Loans

Acquiring a dreamed land or property mortgage loans is taken out. Approximately the term is 25 years but could be shorter or longer as well. The loan needs to be secured until it’s all paid of that means the lender can sell the property to get their money back.

Although most people do not think of them as loans, mortgages are loans just for a different purpose. There are different types of mortgages, the differences lying in their interest rates, flexibility and fees.

A common and most popular type of mortgage is the fixed interest loan. For this type of loan, you pay a fixed interest rate for a period of six months to five years. At the end the agreed term, you can choose to re-fix the loan or move to a floating interest rate. A floating rate, also known as a variable rate, is where the interest rates go up or down depending on market conditions. One of the biggest advantages o these types of loans is that you can repay your loan early without any penalties or extra charges.

The main Mortgage Loans payment structures 

The most common type of repayment structure is the table loan. Here, you choose a term of up to 30 years, with the earlier years used to pay off the interest on the loan and the rest used to pay the principal, the initial amount borrowed. Revolving credit loans are where the money is taken right from your account from any payment made into that account.

Other Mortgage repayment structures 

An offset mortgage is one where you link different accounts to your main mortgage account. The amount in the other accounts is subtracted from your mortgage, and you pay interest on the difference. Linking many different savings accounts to your mortgage account could lead to paying a lot less interest.

The main advantage o these types of loans is that since money is continuously deducted from your account(s), you pay less interest over time because the interest rates are calculated daily.

A reducing loan lets you pay a fixed amount of principle with a reducing amount of interest for each repayment. Interest only loans let you pay interest only for some time then switch to any of the other payment options.