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Home Loan Mortgages

22 November 2018 No Comment

Nearly everyone has some image in their mind of the home of their dreams. It is a nice thing to daydream about from time to time. But while one may never be able to afford their true dream home, It is also nice to know that through a mortgage loan one can obtain a home that would otherwise be unattainable.

Home loans are loans that one takes out with a bank or mortgage lender to purchase their home. Since the vast majority of people do not have the funds to outright buy a home, they borrow money to make this happen. They agree to pay that money back over a long period of time in monthly installments. If the home loan take out was set for 30 years for example, then the monthly payment that the person makes on the home would be much lower than if they were paying on one for 10 years. It is all a matter of the time horizon that one has for their new home.

There are seemingly as many home loan varieties as there are people, but there are a few basic types that everyone should know about. The first type is the adjustable rate mortgage, and this is the most common type. With a mortgage like this, the borrower is subjecting themselves to the tides of the marketplace so to speak. The interest rate on their mortgage moves as interest rates in the market in general move. If rates are low, then everything is great. However, if rates are high, then the mortgage holder could end up having to pay more than they can afford for their home.

Fixed rate mortgages are another common type of home loan. These mortgages are, as their name implies, fixed. The interest rate on a mortgage like this is known, and there is no way that the rate can move up or down. The borrower knows how much he or she is going to have to pay each month no matter what. When one takes out a mortgage like this, there is perhaps more stability in the decision that they are making. With fixed rate mortgages, there are also 10, 15, and 30 year options available.

But what about for those who want to purchase a home that is on the market but they have not sold their current home yet? For people in this situation one can obtain what is called a Bridge Loan. This works by allowing the borrower to obtain additional funds secured by their current property. This is a loan that would be used typically between a month and about a year and a half or so. They are usually quicker to obtain than regular loans but may carry a higher interest rate than your typical mortgage. I recommend this Bridging Loans Calculator to find out more information. We recommend talking with a financial advisor or mortgage specialist in order to assess your situation before making any major purchase.

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