Getting a mortgage is one of the biggest financial decisions you are likely to ever make. It can sometimes seem like a daunting process and a little overwhelming for some people. There are many different types of mortgages available to people buying a home, furthermore, with the different types of mortgages there are many different options. Don’t forget to use a mortgage calculator when you first start, you can find them online. It is also useful to have an idea of your credit rating before you apply for a mortgage, that will give you a good idea of what your options are. You should remember that it’s important to keep your eye on the mortgage rates during your house search, this may have an impact on which type of loan you will choose. Here are some useful tips and information for those looking to understand how the whole process works:
1) Fixed-rate
This is probably the easiest type to understand. A fixed rate mortgage means that you pay a fixed rate back each month, the amount does not change. These mortgages are usually paid back between 15 to 30 years.
2) Adjustable Rate
At first the rate will be fixed for an agreed period, after this period has finished the interest rate is adjusted on average very year. The rate will reflect the market interest rates at that time.
3) Convertible
This is an adjustable rate loan that gives you the option to convert your mortgage into a fixed rate mortgage at (or before) an agreed date. This means that you check on how the market is looking and make your decision, if you want peace of mind you can choose to get a fixed rate.
4) Ballon
Ballon loans are usually where you pay off the interest on the loan. This means that the amount that you borrowed does not decrease, the full amount will be due when the loan period comes to an end.
There is plenty of people out there that you can talk to for advice about which mortgage is right for you; banks, some government schemes and many other avenues of advice are there to help you on your way. Asking friends and family is always a great idea, they will tell you about their real life experiences and let you know some invaluable tips for becoming a house owner. Once you’ve found the right mortgage type for you then the next step is to apply, hopefully you will approved as son as possible. Happy house hunting!
