You might think that the process of choosing and getting a mortgage is simple. Many people think that until they actually start looking into all the options out there, and realize that their plans might not be as simple as they had first thought. The fact is that there are dozens of types of mortgages out there, each with many variables within itself that makes for tough decision making. You need expert help in order to make wise, solid decisions on the matter, and the best way to do that is to go visit a mortgage broker.
But a bit of understanding about the different types of mortgages out there never hurt anyone. We Know Mortgages, and that knowledge is extremely valuable. It can be a big asset to you to know a bit more about what’s out there for you, and how your choices can vary.
There are two basic types of mortgages, as listed below.
Interest only mortgages include just about any type of mortgage where you only pay the interest until the mortgage has reached a certain point. Once the mortgage has reached its end, the person who took out the mortgage is expected to pay the value in full. These mortgages are good because they allow you to save for paying off the mortgage as you like, but they also end up costing you more in interest.
Repayment mortgages are the second main type of mortgage, more widespread and common than interest only mortgages. These are basically normal loans, where you have to repay both the value of the loans and the interest at the same time in steady increments. You end up paying far less interest with these mortgages rather than interest only mortgages, but you have to be prepared to pay more as you go along.
Interest only and repayment mortgages are just two of the many types of mortgages out there—some of which fall under one of the two categories, and some of which don’t. Some more specific examples of the types of mortgages out there include:
- Let and buy mortgages: allow you to buy a new place while you are letting your old one.
- Capped mortgages: specify a maximum interest rate, and charges you no more than that.
- Joint mortgages: mortgages you take out with someone else jointly.
- Self-certification mortgages: require less proof of income.
- Unconventional mortgages: differ from mainstream mortgage options.
Unless you take time to learn about mortgaging and invest in the help of a mortgage broker, you might find taking out a mortgage to be far harder than you first expected. You can make the best of the situation by finding the right plan for you and the perfect mortgage option, but you have to be willing to put in the money, thought, and research required.