How to Choose a Mortgage for Your New Home?
Home builders always advise prospective home buyers to take out home loans to finance the biggest investment in their lives. The commonest types of home loans are of course variable rates and fixed rates.
It is necessary to check a new home to avoid any inconvenience in the long run. Hire Pre-purchase inspections to assess the structure of the buildings/houses. Sometimes, if the inspectors found that your house is no longer secure to use, demolition of it is necessary in order to build a new one.
Honeymoon Loans or Introductory Rate
This type of a loan is targeted solely at first time homebuyers who are expected to pay cheap rates during the initial phase. The rate of interest is discounted for the first one year usually or for six months or for 3 to 4 years, depending on the lender. This introductory rate can be of two types – discounted fixed rate and a fixed discount. Fixed discount has a variable rate and will rise and fall with the market.
Market economics won’t affect the discounted fixed rate. You may have to pay a significant penalty if you try to get out of this loan. Think hard and consult experts before taking a loan of this type, as it will be advantageous for you only for a year or so, whereas it might take you 15 to 30 years to repay the entire loan amount.
Home builder may advise you to take construction loans if you are getting your home built from scratch. Construction of a house can be divided into 5 different stages – final stage, lock up, roofing and frame installation, the padding or flooring and purchasing the land. Each of the phases of construction can parallel each drawing of the loan.
This means you can divide a construction loan amount into 5 different and progressive draws. The advantage of taking this loan is that it saves interest payment. You have to pay lesser interest on your loan. You also have to make lower repayments.
Are you planning to move to your new home? Contact a home removals company to help you with the moving process.
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