Mortgage types that are available in the market today are different. And choosing from these different types of mortgages and interest rates makes your head spinning. So, how do you know what mortgage type is right for you?
There are two types of mortgages available in the market, the fixed rate mortgages and the floating rate mortgages. The fixed rate mortgages are mortgages where the monthly mortgage payment amount remains the same for the entire life of the contract while the floating rate mortgages floats or changes throughout the life of the contract.
Which mortgage is better, fixed rate or floating rate? The answer still depends on the paying capacity of the borrower or it can be decided on your future plans. If your plan is for a shorter period then the floating rate is generally advisable. If your plan is for a longer period then the fixed rate would be the best option. Also, check out the “no prepayment penalty” option with your creditor. This option means that you can sell the house, pay back part of the loan early, or refinance at any time, with no “penalty” of having to pay an extra fee.
Owning a home is great for it boost your personality but buying your dream home is the hard part because you have to consider many factors such as your capability, your family, the property, the location of the property, the environment and the mode of payment.
Finding the best mortgage package is not that easy. So, try to shop around and compare the interest rates then choose the mortgage package that will suit best for you and the family. Talk to real estate agents or to your bank to get better ideas on different types of mortgage available in your community.