There several factors to consider when you intend buying a home.
One of such factor is your budget.
Your budget will determine the kind of house to buy. Most potential homeowners do not have the full payment to make once they see their dream home, what they do is to seek where they can access home loans. Home loans are generally money borrowed from a financial institution with the intention of financing the purchase of a new house. The method of accessing home loans varies, depending on your country.
This blog post focuses on the different types of home loans you can access whenever you intend buying a new house.
Home loans or mortgages are fundamentally offered by financial institutions such as banks. Some other institutions such as building societies, specialist home loan companies, and finance companies, have joined the bandwagon of offering home loans. You can decide to access the home loan by yourself or you hire the services of a mortgage broker. A mortgage broker is competent to negotiate a favorable home loan for you. However, not all lending institution accepts to deal with mortgage brokers.
Having known what home loans are. The next big question on the lips of potential homeowners is “What are the types of home loans available?” Well to answer that question, there are several home loans available depending on your country of resident. If you reside in New Zealand, the following are the home loans available;
Table loans are the most common type of home loan in New Zealand. Here is how table loan works; the early parts of the repayment are mostly used to service the interest, while the concluding parts of the repayment are then used to service the principal.
Revolving credit loans:
The way the revolving credit loans works is similar to that of a large overdraft. With this loan, your bills will be paid using your income accrued in the mortgage account.
This type of loan will reduce the interest you will pay.
Straight line or reducing loans:
This loan type will make the interest you are supposed to pay to reduce. However, the same amount of principal will be paid each time you make payment.
With this type of loan, you will pay interest and principal, but that would be after an agreed time.
Before you decide which of the loan type to subscribe to, you need to research on how the interest rate works. It is pertinent to mention that there are two types of interest rates. The first type is the fixed interest rate. This type of interest rate supports a fixed interest over a period of one to five years. The second type of interest rate is the floating type. Interests are not fixed but fluctuate according to market forces.