A mortgage is a financial scheme provided by financial institutions such as banks to potential buyers looking to purchase a home or property. There are a number of things to consider before settling on a mortgage plan. Here are a few pointers to assist you in making a decision:
- Interest Rates – It is important to understand the rates offered by different institutions and how they are affected by the market rates. Evaluate your economic capability in relation to the rates and ease of payment.
- Agreement Features – Analyze the mortgage package and find out if there are any advantages such as mortgage restructuring or provision of a lump sum pay off subject to the availability of money, to help bridge the loan repayment.
- Financier Requirements – These include the maximum repayment period and the type of mortgages available to suit your financial needs.
Mortgages are slowly becoming popular with many, granting those without outright cash the opportunity to own their dream homes and pay over a period of time. It is however important to note that mortgages end up costing a lot more than the initial price of the property. Failure of payment during the course of the agreement could also lead to foreclosure, repossession or auctioning of the property.
It is advised that when choosing a mortgage plan, first determine how much you can afford and then acquire property that is slightly below that margin to ensure adequate cash flow and to provide security in case of unemployment or unforeseen financial circumstances.
Get more property insights from Pam Golding.