First Time Buyers Mortgage

First Time Buyers Mortgage



First time buyers mortgage
Introduction
Property is​ an investment,​ and​ if ​ purchased in​ a​ planned way is​ beneficial otherwise it​ may be dangerous if ​ a​ high amount is​ borrowed. ​
Most of​ the​ financial authorities prefer the​ first time buyer and​ offers various incentives. ​
You should contact to​ an estate agent and​ discuss about your financial health,​ repayment options,​ and​ selection of​ mortgage and​ redemption options. ​
On the​ basis of​ your financial repayment capabilities,​ you​ should select a​ most beneficial option.
Benefits of​ home over rented house
• The rent you​ pay is​ not admissible to​ give you​ benefits under state or​ federal law. ​
The mortgage loan interest is​ deductible from income tax. ​
This saves a​ lot of​ amount.
• The property tax paid is​ also accounted for tax deduction purposes.
• The value of​ own house will rise over a​ period of​ time and​ it​ will be an additional benefit.
General Mortgages
a Fixed rate Mortgage and​ Adjustable rate Mortgage
Whether you​ are eligible for a​ particular mortgage or​ not,​ it​ is​ better you​ know about all types of​ mortgages. ​
The common types of​ mortgages include fixed rate mortgage and​ adjustable rate mortgage.
In fixed rate mortgage,​ the​ interest rate remains same for throughout the​ mortgage periods. ​
Some mortgage may be as​ high as​ for 30 years and​ some may be lower periods. ​
The benefits of​ fixed types of​ mortgage are that you​ can plan in​ advance the​ amount to​ be paid.
In adjustable rate mortgage,​ interest rate generally starts lower than the​ fixed rate mortgage and​ may vary once or​ twice during the​ year as​ these rates are linked to​ a​ financial index. ​
Depending on​ financial index Treasury Security Index for United States the​ rates may be either low or​ high. ​
as​ the​ initial amount in​ these rates is​ always lower than the​ fixed rate mortgages,​ a​ more mortgage loan can be secured for the​ same burden.
b Repayment and​ Endowment Mortgage
First time buyers prefer repayment mortgages,​ as​ at ​ present conditions endowment mortgages are not capable to​ cover the​ mortgages.
c Interest only option of​ payment
Some lenders may give an option for a​ few years for repayment option of​ loan interest only. ​
In such cases,​ the​ repayment amount will be low,​ but principle amount will remain as​ such. ​
So this option is​ not favorable.
Mortgage Amount
Many lenders may offer 100% of​ the​ property value and​ up to​ 5 times salary of​ the​ individuals. ​
it​ is​ recommended that single person should take between 2.5 to​ 3 times of​ the​ salary and​ couple should take 2 to​ 2.5 times of​ the​ salary.
Mortgage Indemnity Guaranteed MIGs
First time depositor may be asked by the​ lender to​ deposit a​ few percent 5 to​ 10% of​ the​ loan amount for a​ lower risk of​ mortgage default. ​
if ​ the​ deposit amount is​ less than the​ expected amount,​ the​ lender may force the​ borrower to​ buy MIG. ​
This is​ an insurance policy and​ provides protection to​ lender in​ case of​ default. ​
These MIG are of​ no use to​ the​ borrower,​ as​ the​ premium amount of​ these policies has to​ be paid by borrower. ​
Therefore the​ borrower should initially deposit 5 to​ 10% of​ the​ loan amount,​ to​ avoid MIG. ​
if ​ the​ borrower has to​ take a​ MIG,​ the​ borrower should ensure a​ good deal.
Penalty
The lender lends the​ money to​ the​ borrower against a​ mortgage deal for a​ fixed period and​ if ​ the​ borrower does not follow the​ deal,​ a​ provision of​ penalty is​ made.




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