Mortgage Types

Mortgages generally refer to a money loan and can best be illustrated in the property market where a prospective buyer requires additional finance to purchase the property.

You are going to take out a loan from the Bank or other financial institution, and at the same time pledge the property you are buying as security for the loan. You will be able to repay this loan over an agreed period of years and pay the installments monthly
There are various types of mortgage deals available and the best advice is to discuss your request with a reputable bank which has a Mortgage department or some other financial institutions which specialize in this type of finance. There are also on line sources where you can find sound advice and with no cost be able to make comparisons of the types of mortgages available.

There is a fixed mortgage:
The interest rate that you will have to pay is fixed at the time you sign the agreement. It will not change and so you know with certainty exactly what your monthly financial commitment is during the term of your loan. This makes budgeting simple.
Discounted:
The Bank has a rate that can vary over a period. You enter into an agreement which is that whatever the rate you get an agreed discount. This means that whatever that rate is, your agreed discount applies. The standard bank rate may go up or it may go down, but whatever it is you get the discount you agreed to. The period of the loan is again fixed and during this period your rate is the discounted by your agreed amount.
Tracker:
The interest rate on this type of loan is linked directly to the Central Bank base rate. This means that if the Reserve bank rate changes, so will the rate on your loan change
Capped:
With this type of loan the maximum rate of interest is set at the start. So for the duration of your loan, the interest rates might fall below this rate but you are assured that your interest rate will never rise above the capped rate you agreed to.

Naturally the amount of money that you will be able to borrow will depend on the value of your property. The valuation of the property is done by a valuer sent by the bank. He will assess the value and report accordingly. If it is a new property you are wanting to buy you should take into account some very important factors that decide the value of a property. For example certain locations are much sort after and even if the property is small if its location is very good the value will be very high. A large property in a bad location will not attract much interest.

You should negotiate your loan very seriously to ensure you get the best rates available.