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The Various Types of Mortgage to Buy your Dream Home

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We all need home loans, such is the world that most people do not have the necessary funds to purchase a home outright and when it comes to mortgages, there are many different forms to give the borrower options. In this short article, we take a look at the common types of mortgage you can find online.

  • Conventional mortgage – The most common home loan, whereby the real estate is the security and when the payments have finished, the borrower’s name is entered on the Title Deeds. This is the ideal solution for those with good credit rating; if you can afford a large deposit, this would be the best choice. Talk to the excellent mortgage brokers in Parramatta and in no time, you have the funds to make an offer on your dream property.
  • Fixed rate mortgage – As the name suggests, the interest rate is fixed for the duration of the loan; your monthly mortgage payment always remains the same and these loans are typically 15 or 30 years. When looking for a home loan, approach an award-winning mortgage broker, as they have the best selection of mortgages and can find one that suits your lifestyle.
  • Adjustable rate mortgage – ARM usually offer low interest for the first few years, with periodic increases that are agreed upon. Ideal if you are finding it difficult financially, choosing a loan that offers adjustable interest rates makes sense. It is possible to reduce the interest payments at any given time and this flexibility is welcomed by many. If you are wondering how much it would cost to retire early, click here.
  • Interest only mortgage – The first 5 years would mean only paying the interest, with the principle payments would begin at the 5-year mark. This offers you lower initial payments and if you expect your salary to increase after 5 years, this might be the package for you. Talk to a broker who can advise you when it comes to choosing a mortgage and you can be sure to find the best solution.
  • Piggy back home loan – With this loan, there are actually 2 loans, one for 80% and another for 10%, with the final 10% being the deposit. Popular in the US, this loan is costly in terms of fees, as there are two loans in effect. An independent broker has working relationships with many lenders and they can find packages that can be tailored to suit the borrower.
  • Balloon mortgage – This product involves making a large payment at the end of the term, which is a serious commitment; if you are sure that you will be in a position to make a large payment at the end of the loan period, this will work. For further details, talk to an experienced mortgage broker and let the expert help; once they know your requirements, they can usually find the right loan.
  • Home renovation loan – This would be ideal when the property requires major renovation, which combines the cost of the asset and the renovation into a single loan. Some people prefer to buy a rundown property with a lot of potential, then spend the money to renovate and this would be the best loan for such a project.
  • Non-qualifying loans – These do not meet the criteria of specific standards required, which means they can be forgiving on terms and income requirements. If you have an uncertain income, a NQL might be the best way forward.
  • Reverse mortgage – This involves the homeowner being their own security from the age of 62 and up. If the owner sells or dies, the proceeds are used to settle the loan. This product is flexible and ideal for a person who has no family, as the property settles the loan.

As you can see, the world of home finance is complex and without the right advice, you could end up paying a lot more. The independent broker is the best person to connect you with lenders and using a brokerage with a great reputation ensures success.

If you are ready to start searching for your dream home, contact one of Sydney’s top independent mortgage brokers and let the experts find the best home loan for you.

 

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Mick Pacholli

Mick created TAGG - The Alternative Gig Guide in 1979 with Helmut Katterl, the world's first real Street Magazine. He had been involved with his fathers publishing business, Toorak Times and associated publications since 1972.  Mick was also involved in Melbourne's music scene for a number of years opening venues, discovering and managing bands and providing information and support for the industry. Mick has also created a number of local festivals and is involved in not for profit and supporting local charities.        

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