Choosing a mortgage loan to suit your lifestyle can be an uphill task. The task is further compounded these days by the sheer variety of mortgage options available in the financial markets. How do you choose the mortgage that would be the most suitable for you?
The traditional mortgage loan is the thirty-year fixed rate mortgage. This removes the uncertainty that may be prevalent in other types of mortgages, by providing a fixed term and a fixed rate of interest.
The other basic mortgage type is the one-year adjustable rate mortgage. This type of mortgage is also one of thirty years. But in this case, the rate of interest is subject to change every year based on the index that your loan uses.
There are many permutations and combinations of these two types of mortgages. Some loans fix the rate of interest for periods of three or five years, and then the rate is allowed to change.
There are still other mortgage options that allow you to choose how and when you would like to pay. So you could pay back the entire amount in one go, or you could make more than a single payment, or even just pay the interest for that month. These mortgage options, if used wisely, can save you a good deal of money. However, if for instance, you make a habit of paying only the interest amount, it could spiral into a lot more expense than you had originally bargained for.
So even while looking at the various types of mortgages, ensure that you find a mortgage that meets all your specific requirements. When shopping around for a mortgage, decide what the issues that are important to you. Would you prefer a static rate of interest or would you like to avail of market conditions where the rates drop for a while? Are you looking to pay off the loan in one shot or would you rather repay it a piecemeal, over a long period of time?
You could find mortgages that allow you an interest cap so that even if the interest rates are allowed to fluctuate, they will never go beyond your reach. If you are a person with an inconsistent income, you could consider taking up an adjustable rate mortgage which gives you the option of paying whatever amount you deem fit at that time. This is a risky option to go for, but is very suitable for a person with an inconsistent income.
There are lots of mortgage options available in the loan market. Find the one that suits you best.