Home Loans Understanding The Types Of Mortgages

Home Loans Understanding The Types Of Mortgages

by

pankaj1

When shopping for a home loan, even though it may be LIC Housing Finance Home loan, a borrower should choose the best loan program for its personal needs and wants. Choosing the right type of loan involves consideration of key points, such as:

Your current income status

How long you plan to keep your house

In what manner you want your finance to change

Your capacity to adjust towards a changing mortgage payment

The most trusted way to choose a right mortgage is to know about your current financial conditions, financial prospects, strategies and your preferences.

Here are some common types of mortgages which would help you choose the right finance for you:

Fixed-Rate Mortgage

This type of housing finance doesn t affect interest rate and remains constant for entire term of the finance. However, variation in rate follows when the bank/lender has to change the rate due to unavoidable circumstances.

Adjustable rate mortgage

If you want to seek PNB Home Loan on this term, the rate of interest on your finance will be adjusted periodically by the lender. According to this, you need to pay off very lower installment monthly to your lender in the beginning. However, the monthly installment will bring forth negative amortization after a rate adjustment has been initialized. This means, you would end up paying huge installment at the end of the loan term.

Balloon payment mortgage

This is a fixed rate home loan. It is usually offered for a short term to borrowers. The monthly installment outgo continues for a certain period of time. Initially, the borrower needs to pay off smaller monthly installment, and large payment at the end of loan term.

Blanket mortgage

This type of mortgage is used to purchase several real properties. It is specifically used by builders and developers to purchase large piece of lands for their commercial merchandising.

Bridge loans

Also known as caveat loan, bridge loan is a short term interim financing. You can avail it for a period of 2 weeks to 36 months. It usually comes with higher interest rate and so is very expensive than the conventional financings.

Interest only mortgage

This is very cheap and affordable mortgage. You need to pay off only interest rate on principal loan amount, not the entire capital. However, when the mortgage term expires, you need to pay large sum of money coupled by principal payment and interest rate.

Reverse mortgage

This type of housing loan is beneficial for homeowners. You can put mortgage your property/home with a bank. In return, the bank will pay you a regular payment while you can continue living in the house till death. After death, the property is sold off by the bank to recover the loan.

Apply For

LIC Housing Finance Home Loan

in India.

Article Source:

ArticleRich.com