Find the mortgage you want

Figure out what mortgage you want before you start house hunting to make the process easier.

08:29 10 October 2013

Many of us dream of someday owning our own homes, but before that can happen the majority of us are faced with mortgages in order to acquire such dreams. The process for house hunting involves many things and can be intimidating. It’s a good idea to familiarise yourself with the various mortgage options available so you’ll have a better idea of the type of home you can easily afford.

Here are a few of the different mortgage options that could be available to you:

• Repayment mortgage—this type of mortgage puts your payments towards the initial loan amount, often referred to as the principal, as well as toward the interest that accumulates on the loan.

o    There are multiple options within the repayment type of mortgage. You may have different loan length terms to consider, different interest rates, and other details.

 

o    Variable interest—the interest rate may change according to the stipulations given by the lender, such as the economy or current declared interest rate.

 

o    Fixed rate interest—this is exactly as it sounds, your mortgage loan is set at a fixed interest rate for the duration of the loan term.

 

o    Capped rate—these mortgages may provide a variable rate, but one that cannot go beyond a set rate limit.

• Interest-only mortgage—this type of mortgage uses your payments only toward the interest portion of your loan. At the end of the loan term, the remaining amount is the principal and may be due in full.

o    You may be able to invest enough to acquire funds for the payoff amount, or you may be able to get an additional mortgage such as a repayment mortgage for the remaining amount.

• Specialty mortgages—check resources to see if you qualify for a programme to make home purchase easier.