The best way to finance a new home purchase is through a mortgage. This allows you to borrow money for a set period of time, usually 30 years. There are many types of mortgages available. The one that is right for your needs will depend on your circumstances, so be sure to research them thoroughly before applying.
- Fixed Rate Mortgages
A fixed rate mortgage is one where the interest rate remains constant throughout the term of the loan. The payment you owe each month is the same until you've finished paying the loan.
- Variable Rate Mortgages
If you prefer to make regular payments, then a variable rate mortgage might be right for you. With a variable rate mortgage, the interest rate changes periodically based on market rates. This means that you will not need to worry about paying extra fees when the rate goes up. However, there are some drawbacks to this type of mortgage.
- Interest Only Mortgages
An interest-only mortgage allows you to pay just the interest charged each month for the term of the loan. You don't have to repay the amount you've borrowed until the end of the term. This type of mortgage is ideal for people who plan to stay in their home for several years. It also makes sense for those who cannot afford to put down a large deposit on a property.
- Repayment Mortgages
A repayment mortgage allows you to make regular payments towards the total amount borrowed. These loans are usually offered by banks and building societies and used as an alternative to an interest only mortgage.
- Conventional Mortgages
A conventional loan is one where you pay back the full amount of money you borrow at the end of the term. This type of loan is also known as a fixed rate mortgage because the interest rates remain constant throughout the term of the loan.