Mortgage a loan to buy homes does have many options. You should know the basics before deciding what kind of loan you want. Yes mortgage is also of different type. Take the one which suits you budget and situation.
- Bridge Loan – It is a short-term loan, in which one property is used a s security to buy or renovate another property. It is a bridge to buy a second house. Hence the nomenclature.
- Fixed rate loan – This is the most popular. The bank provides fixed rate of interest of up to 30 years on the loan. Suitable for young people who can pay a fixed amount over a ling period of time. It is a long-term loan.
- Interest only – This is the type of loan product in which the borrower has to pay only interest for an initial number of years. Good for people who are young and will have more income in the future.
- Variable rate loans – In this kind of loan the interest varies year by year. It is good to take when the economy is good. Generally you end up paying less than fixed rate loans.
- Loan against property – Property generally appreciates at a great rate. If the value is more the valued amount at the time of taking the loan to buy the property, the bank can give you additional loan against the appreciated value.
- Reverse mortgage – A product specially made for elderly. The original loan is generally almost fully paid up. The difference is paid by the bank to the owner against property.