mortgage
Most of us will apply for a mortgage loan only once in our lives. How it works, how to go about applying for one and how to use mortgage calculator may be completely new to us.
When applying for a mortgage loan, you can use one of three routes. You can decide to use a mortgage broker, go directly to a lender or shop around yourself.
The most important thing to remember is to make sure the lender or mortgage broker is regulated. You do not want to go through a whole process and get burnt in the end.
It will be to your advantage to compare more than one option. If you decide to take the first one you come across you might find that another suits you better.
A mortgage calculator can easily be downloaded from the internet. Get involved and do your own calculations as well.
Various repayment methods are available. You can either repay the loan monthly or you can pay back the interest only.
The latter is appealing because if you pay back interest only, you will pay only a small amount every month. The catch here is that the loan must still be paid back and you must make sure that you can do so at the end of the term, i.e. you must know where the money will be coming from.
Interest rates can either be fixed or flexible. If you decide on a fixed interest rate, it means that the rate will be fixed for a set number of years.
If the interest rates go up in that period, it will be in your favor. If, however, the interest rate comes down, you will pay more where you could have paid less.
A flexible interest rate means that the rates will go up or down as the rate is changed by the government. This makes it more difficult to plan monthly budgets, as you will have to make adjustments if the rate goes up.
It is necessary to give the lender all the information regarding your income and your monthly commitments. This way, they will be able to calculate the correct amount that you can borrow. If you overstate your income, you will find yourself with a loan you cannot afford.
Budget your monthly expenses correctly. Apart from the mortgage repayment itself, you will also be required to obtain life insurance to cover the loan.
A good credit score is of the utmost importance. It will be easy for the lender to check how you have borrowed and repaid in the past. If your credit record is not flawless, take the trouble to improve it before applying for a mortgage loan.
Have savings available. You will be required to pay a deposit on a property once you have made an offer to purchase.
Use the mortgage calculator to work out your repayments with various deposits.
Also, remember that you will likely need furniture and appliances for your new home. If you have savings, you can buy accessories and make small renovations to turn your purchase into a family home.
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