4 Types of mortgage loans you can opt for

images (1)

Approaching a mortgage lender without having an idea about the different types of mortgage loans available in the market will make you end up with a not so feasible loan. If you wish to get the b\most appropriate mortgage loan, ensure that you do a complete research about the kinds of loans available in the market.

The first type of mortgage loan available is fixed rate mortgage. Its supposed to be the most renowned mortgage loans of all types. The main reason of its popularity is that it is simplest to understand and borrowers will not have a complicated tenure of repaying the loans. Once decided the borrowers will have a fixed amount of installments. This is because the interest rates here are fixed for the entire period. Thus they will have a fixed plan for the rest of the tenure.

The second type is variable mortgage loan. It is also popularly known as adjustable mortgage loan. This interest rate here is divided into two parts – fixed and index. The fixed interest rate will remain constant for the entire tenure of the loan. However the index interest rate is depended on the market situation. It will fluctuate as per the financial market situation. A rise in the market rate will directly have an impact on the repayment value of the loan amount.

The third among the types of mortgage loans is balloon mortgage loans. This type of loan is very similar to the fixed rate mortgage loans only they do not sustain as long as the fixed rate mortgages. These are shorter term loans for about seven years maximum. After the tenure of the loan gets over the remaining amount to repay is stated as the balloon amount.

The fourth type of mortgage loan is the interest only mortgage loans. As the name says it all this type of mortgage loan will allow you to pay only your interest amount first in the pre decided time. Thus being a borrower you will get an opportunity to repay lesser amount of installments for initial tenure. However once the interests amount is over you will have to bear the installments of the principal amount.

These are the four most popular types of mortgage loans available in the market. You can approach your lender and ask the details related to each type of loan before deciding. A good lender will help you know everything about every kind of loan.

Leave a Reply

Your email address will not be published. Required fields are marked *