Choosing From A Mortgage Medley

Choosing From A Mortgage Medley



Choosing From a​ Mortgage Medley
What do you​ do if​ you​ are looking to​ buy a​ house? you​ sift through a​ series of​ mortgage loans .​
What is​ the​ best kind of​ mortgage loan? That would be based on​ how much you​ are intending to​ borrow and on​ the​ rate of​ interest that you​ would be able to​ afford .​
Generally speaking,​ the​ greater the​ period of​ the​ loan,​ the​ lower will be the​ interest rate that you​ will be charged.
With regards to​ the​ various types of​ mortgages,​ there are two major types .​
On the​ one hand we have the​ repayment-only mortgages .​
On the​ other hand,​ we have the​ interest-only mortgages .​
Why don't I​ just explain the​ two types to​ you?
Now,​ repayment-only mortgages consist of​ two types of​ repayments .​
When you​ choose to​ get a​ repayment-only mortgage,​ you​ will be paying off monthly installments of​ both capital and interest .​
Sometimes you​ will not be able to​ help feeling as​ though you​ are shelling out far more than you​ would in​ other types of​ mortgages .​
Well,​ my advice to​ you​ would be not to​ worry too much about it .​
The only reason that you​ seem to​ be paying more is​ because you​ are paying off not just the​ interest but also parts of​ the​ capital.
So now let us talk about interest-only loans .​
How does this work? Well,​ if​ you​ had been following the​ mortgage markets a​ few decades ago,​ you​ would have heard of​ the​ notion of​ endowment mortgages .​
If you​ are unaware as​ to​ what an​ endowment mortgage is,​ try reading on.
An endowment mortgage is​ a​ type of​ interest-only mortgage where the​ borrower is​ required to​ invest in​ an​ endowment fund or​ some other kind of​ life assurance policy .​
Thereafter,​ the​ borrower has to​ pay off only the​ interest that accrues on​ the​ mortgage .​
The capital is​ repaid by the​ endowment fund .​
Of course,​ this has its bad points,​ for the​ fund's performance is​ affected by market conditions .​
In the​ case of​ the​ endowment mortgages in​ the​ United Kingdom,​ these flaws were revealed when the​ markets collapsed in​ the​ 1990s .​
During that period,​ a​ large number of​ mortgagers suffered because their funds performed badly,​ leading to​ losses for all.
Endowment mortgages have ceased to​ be popular in​ the​ world of​ today .​
However,​ other kinds of​ more stable,​ interest-only mortgages are still availed of .​
Would an​ interest-only or​ a​ repayment mortgage suit you​ best? in​ my opinion,​ that is​ simply a​ matter of​ preference .​
Both types have their own pros and cons .​
Make sure that you​ do thorough research of​ the​ mortgage markets before making your final decision.




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