If you are forced to obtain a home loan, you must first choose the type of loan, the interest rate and the maturity. A key choice that will have an impact on future forward costs and then your future private finances. Read more at http://hsalliance.org
A good tip before deciding on a particular loan type is to decide:
1. The size of the loan
2. If you want to be able to convert the loan
3. Your expectations of the interest rate on the mortgage
4. The time you expect to own the property
5. Loan type – there must be regular fixed rate loans, interest rate adjustable loans, guaran- tee loans or interest-only loans.
Am I going to want to convert the loan?
If you have a bond with a fixed interest rate and the interest rate falls, you can convert the mortgage to a lower interest rate, thus reducing the mortgage after tax. If the interest rate increases, on the other hand, you can convert your loans and in that way you will save some of the remaining without tax consequences.
The repayment period on my home loan
Remember that you can choose between different maturities, usually 10, 15, 20 or 30 years. You have the option of choosing loans with maturities that are easiest for you. The longer the duration of your home loan, the less the installment costs, since you pay less at each installment of the loan.
You are advised to take your current and estimated income and assets into account when making the choice of maturity on the loan. Keep in mind that if it is important for you to get as simple installments as possible immediately, you should make a choice on a 30-year loan, which is also typically the longest term. If you think that you will retire in 20 years, it is probably best to consider a 20-year mortgage so that you become debt free and enjoy your retirement. You are also advised to note that long-term loans can help you reduce any other debt, which is usually more expensive.
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