Mortgages - Which Loan is Right For YouWritten by Joseph Kenny
When buying a home, you need to take a home mortgage loan, either because as a debtor, you end up paying less tax, or because in a market where property prices rise faster than salary levels, money you have saved falls short of amount required. When searching for a home mortgage loan, you can select from a wide variety. Study types of mortgage loans available in market and note interest rates for each before you sign any documents. You can select from following:
Fixed rate mortgage loans charge you same rate of interest over a period of 15 to 30 years. You pay a high rate of interest over tenure of loan, because neither you nor lender can take advantage of interest rate fluctuations, but you pay same sum each month. This is an excellent option if you are on a fixed income or a salary. You begin by paying off interest first and principal later—as most of loan is paid off, your equity in house increases as compared to lenders. When selecting a fixed rate mortgage, check interest rates offered for fixed rate mortgages, select loan tenure based on your repayment capacity, and ensure that you are not penalized for prepaying your loan.
Adjustable or variable rate mortgage loans (ARMs) are mortgage loans for same period of time as fixed rate mortgages, where interest rate changes based on market trends either annually, or every three, five, seven, or ten years. Although ARMs are considered risky due to floating interest rate, amount you pay as interest on mortgage loan is lower as compared to that paid for a fixed rate mortgage loan. If you select an ARM when interest rates are high, you will pay off your loan with a slightly lower interest rate. Ensure that a periodic rate cap and a loan lifetime rate cap is included as part of loan agreement—these will ensure that your rate does not rise or fall more than two percentage points in a period and does not rise or fall more than six percentage points during mortgage loan tenure.
Homebuyer's Loan GuideWritten by Joseph Kenny
If you are a first time homebuyer, there are a few points on a loan for homebuyers that you should keep in mind. These pointers simply ensure that you don’t burden yourself with a loan or repayment and that you can get a justified return.
The pointers to a loan for homebuyers are:
1) Work out your affordability and repayment that would build up against your loan – Apart from price of new home, there are several other one-timely costs you are likely to incur when you buy your house. These one-time costs may include survey lender’s valuation or basic valuation, arrangement fee legal and conveyance fees, land registry fees and so on.
2) Calculate amount you can:
a) get from sale of any current home b) borrow c) can arrange from your savings or investments.
3) You then need to calculate approximate costs of buying and moving. By subtracting this cost from total amount you can arrange, will give you a rough estimate of price range you should target.
4) Conduct a survey for your loan as well as home you are planning to buy – This is expensive but very important. This turns out to be profitable in long run.
5) Now, actually you can go ahead and try selecting house from options available. Even if you have made a proper survey done for your home, try doing a bit of investigation. Since average homebuyer do not buy a house frequently, you must take every possible measure to get best deal. a) Take a good note of location and neighbourhood. b) Think about type of house that would suffice you. c) The general condition, layout, and other minute details about house. d) One of most important legal minutes to note is whether house is on leasehold or freehold and registered and unregistered property.