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| ApartmentNewZealand .Com |
| ApartmentNewZealand .Com |
The Way To Be Rich
Mortgage
What is a Mortgage?
Mortgage is security created on property by the lender, usually a bank or other financial institution.
Before you make an offer, It is a good idea to sort out your mortgage first so that you know how much you can afford
to spend. There are different types of mortgages such as fixed interest rate loans, floating rate(sometimes called
variable rate).
Fixed Interest Rate Loans
The interest rate is fixed for a period you choose when taking out the mortgage, usually between one year to five
years. At the end of the term, you can negotiate another fixed term or it automatically changes to a floating rate.
Taking a fixed interest rate loan gives you the certainty of how much each repayment will be over the term and rates
are normally lower than floating rates. The limits are that: you can pay more interests if you take a long term and the
floating rates drop below your fixed rate; you need to pay charges if you want to make lump sum payments or lift
repayments.
Floating Rate(or variable rate) Loans
The interest rate can go up and down depending on the lenders of floating rate loans. You can lift your repayments or
make lump sum repayment without penalty. However they are often higher than fixed interest rates and you could pay
a lot more than fixed rate loans if the market rates go up.
Ways of Making Mortgage Repayment
Table Loan is the most common type of home loan. A term of up to 30 years can be made with most lenders. Most of
your early repayments pay off interest and most of the later repayments pay off the principal. You can take a table
loan with a fixed interest rate or a floating rate.
Reducing Loan is a straight line mortgage that repays the same amount of principal with each repayment, but with a
reducing amount of interest. The payments of a reducing loan reduce over time. They may suit people who expect
their income to drop in a few years time. They are not very commonly used in New Zealand.
Revolving Credit Loan works like a overdraft. Your income goes into this account and bills are paid out of the same
account only when they are due. You can make lump sum repayments and re-draw money up to your limit. You pay
less interest by keeping the loan as low as possible at any time as mortgage lenders charge interest daily. It suits
people who has uneven income as there are no fixed repayments. You can pay off the mortgage faster and save
interest costs if you budget well.
Interest-only is the loan that you only repay interest not the principal for an agreed period. You have more cash on
hand as repayments are only for interest so it is lower than other types of loan. However, you owe the full amount of
home loan at the end of the term.
Mortgage Insurance
There are two kinds of Mortgage insurance.
Mortgage Protection Insurance is a insurance to protect you by paying out your loan if you die, or become
permanently incapacitated, or makes the repayments if you lose your income temporarily.
Mortgage Indemnity Insurance (also known as Lender's Mortgage Insurance) is usually a once only up-front
fee either paid directly by you or as part of the application fees. It protects the lender against financial loss if you are
unable to repay your loan or go bankrupt.
Mortgage Calculators
Mortgage Repayment Calculator
This mortgage calculator works out how much your mortgage repayments will need to be depending on the interest
rate, period of mortgage, amount and frequency of repayments. It also shows the total amount you will repay including
interest. Go to the Mortgage Repayment Calculator.
Quick Mortgage Calculator
A simple mortgage calculator shows how long it will take to pay off up to three different mortgages. Go to the Quick
Mortgage Calculator
What is a Mortgage?
Mortgage is security created on property by the lender, usually a bank or other financial institution.
Before you make an offer, It is a good idea to sort out your mortgage first so that you know how much you can afford
to spend. There are different types of mortgages such as fixed interest rate loans, floating rate(sometimes called
variable rate).
Fixed Interest Rate Loans
The interest rate is fixed for a period you choose when taking out the mortgage, usually between one year to five
years. At the end of the term, you can negotiate another fixed term or it automatically changes to a floating rate.
Taking a fixed interest rate loan gives you the certainty of how much each repayment will be over the term and rates
are normally lower than floating rates. The limits are that: you can pay more interests if you take a long term and the
floating rates drop below your fixed rate; you need to pay charges if you want to make lump sum payments or lift
repayments.
Floating Rate(or variable rate) Loans
The interest rate can go up and down depending on the lenders of floating rate loans. You can lift your repayments or
make lump sum repayment without penalty. However they are often higher than fixed interest rates and you could pay
a lot more than fixed rate loans if the market rates go up.
Ways of Making Mortgage Repayment
Table Loan is the most common type of home loan. A term of up to 30 years can be made with most lenders. Most of
your early repayments pay off interest and most of the later repayments pay off the principal. You can take a table
loan with a fixed interest rate or a floating rate.
Reducing Loan is a straight line mortgage that repays the same amount of principal with each repayment, but with a
reducing amount of interest. The payments of a reducing loan reduce over time. They may suit people who expect
their income to drop in a few years time. They are not very commonly used in New Zealand.
Revolving Credit Loan works like a overdraft. Your income goes into this account and bills are paid out of the same
account only when they are due. You can make lump sum repayments and re-draw money up to your limit. You pay
less interest by keeping the loan as low as possible at any time as mortgage lenders charge interest daily. It suits
people who has uneven income as there are no fixed repayments. You can pay off the mortgage faster and save
interest costs if you budget well.
Interest-only is the loan that you only repay interest not the principal for an agreed period. You have more cash on
hand as repayments are only for interest so it is lower than other types of loan. However, you owe the full amount of
home loan at the end of the term.
Mortgage Insurance
There are two kinds of Mortgage insurance.
Mortgage Protection Insurance is a insurance to protect you by paying out your loan if you die, or become
permanently incapacitated, or makes the repayments if you lose your income temporarily.
Mortgage Indemnity Insurance (also known as Lender's Mortgage Insurance) is usually a once only up-front
fee either paid directly by you or as part of the application fees. It protects the lender against financial loss if you are
unable to repay your loan or go bankrupt.
Mortgage Calculators
Mortgage Repayment Calculator
This mortgage calculator works out how much your mortgage repayments will need to be depending on the interest
rate, period of mortgage, amount and frequency of repayments. It also shows the total amount you will repay including
interest. Go to the Mortgage Repayment Calculator.
Quick Mortgage Calculator
A simple mortgage calculator shows how long it will take to pay off up to three different mortgages. Go to the Quick
Mortgage Calculator
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