INTEREST MORTGAGES AND REPAYMENT MORTGAGES: Which Is Better?
Mortgages are loans collection text by an individual, it is more of buying time in order to pay with interest for a home, and land acquired, basically real estate property. It is a large ammount of money, usually the largest in one’s lifetime.
INTEREST ONLY MORTGAGES
Here, mortgager (borrower) is required to first pay off the interest on the money borrowed. This seems quite affordable and comfortable at first, in that, the individual only pays back the interest for a maximum of ten (10) years. After that time is reached based on the terms of agreement, the individual eventually pays the principal amount back in lump sum which returns him back to square one.
-It prepares individuals that are not yet financially stable at the moment to offset large bills.
-If there is no set down plan on how to clear the loan, then he may not be able to clear his debt thereby leading to bankruptcy. Visit www.newcityfinancial.com for more info about this.
This is, the surest known way to pay off a loan within a specific time and get back to your normal life. This is how it works; the individual pays the capital ammount that he borrows along with the interest on a monthly basis gradually clearing off the loan. By the end of the agreed period of time (known as term), the individual (mortgagor) would have cleared his loan completely. It lasts for a maximum of twenty five (25) years. Even after constant payments, it may, at some point look like the debt is not reducing but later on, your years of hardworking become evident.
One thing you need to know that is common to both types of mortgages are the type of interest rate they operate on. It can either be:
Having a fixed mortgage rate, the interest rate you pay monthly will remain constant no matter what happens in the money market.
Having a variable mortgage rate, the mortgage is largely affected by fluctuations in interest rate. If the interest rate rises, the mortgage rate increases and if it falls, the mortgage rate falls too (for more info visit www.newcityfinancial.com).