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Which mortgage is right for you?

by Penina

The number and types of mortgages out there are enough to send any would-be homebuyer around the bend. Personally, I’d rather sit by a pool sipping a Penina-colada than spend my precious time investigating the best mortgages and types and how to find ‘em. It’s a good thing I’ve got a nice bunch of experts sending me info and that it is now my full-time job to relay that information to you in an interesting and fun way. (Yeah – happy to report I finally quit that day job. Yeehaa!)
The great news is that now I can save you the time and headache related to finding the right mortgage and you can get busy indulging in the things you love while we (Australia’s saving experts and me) do the legwork.
I’m sure you would agree that life really is too short for topics as fun deprived as mortgages.

It’s only jargon

Actually – it’s all jargon and once you decipher what the banks and mortgage brokers are filling your ears with, you’ll realise that mortgage talk is pretty simple. This fact alone will help you sleep better at night. But in saying that – if the thought of getting a mortgage is keeping you awake at night, you’d better toughen up because actually having one is pretty daunting at first. Still – its nice to go to work knowing your money is working for you, which is why the masses are doing it – so on that note, I’ll just get on with it.

Getting off the rental treadmill

If you are biting your lip while nervously flipping through real estate pages, have another cup of coffee (a donut even) and heed the tips to come. By the end of this article you will have done some important groundwork towards stepping off the rental treadmill and getting yourself a nice new home to call your own.

Types of mortgages

Fixed rate

A fixed rate mortgage is exactly as it sounds – your interest rate will remain the same for period of time that is agreed upon between you and the lender. This is usually five years, though ten year rates can be quite common as well. If you are worried about the state of the market and you like to keep a tight lid on your budget, this type of mortgage is the one for you. Your repayments will be the same for the duration of your loan – but you won’t be able to take advantage of lower repayments if interest rates do fall. It is also usually quite expensive to opt out of a fixed rate mortgage, so think carefully before you lock yourself in.

Variable rate

The interest rate on your loan will vary according to the official cash rate of your country, meaning that the amount of your payments could increase or potentially decrease in equal measure. A variable rate mortgage gives you a great deal more flexibility than you would get with a fixed rate mortgage, as you are able to make changes that suit your current financial situation. If you like to be able to make decisions as situations arise, you may consider this kind of mortgage. Do remember that if interest rates do increase, your repayments will also increase, which will be totally out of your control.

Interest only

Interest only mortgages allow you to pay off your interest before you pay off your loan. You might want to consider such a mortgage if you want to put all your energy into saving instead of stressing about your repayments for the first couple of years.
These are three of the most common kinds of mortgages people tend to take out. There will be other types, depending on your lender and maybe even your bank, but these three tend to be the most popular. Choosing a type of mortgage is not something to be considered lightly, so make sure you do all the appropriate research before you go and see anyone.

Are you ready to take the plunge into mortgage-ville?

Are you at a stage where you’re ready to take the plunge? Are you a business owner looking to find that perfect retail space? While individuals can simply apply to a bank for assistance, business owners have more options, including smaller lenders such as STBLA.Whatever your situation, always ensure that you shop around and do your research.
Do you have a mortgage – or have you had one before? What kind of mortgage did you go with and why? If you could have done it all over again would you make the same choice? Leave your thoughts and experiences down below.

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