Buying a home is one of the biggest investments that you can make in your life. Once you decide to go for it, you should know that it would have an impact on your family’s finances for years.
This is why you should assess the amount of your mortgage repayments. For those who want stability, the best option would be to go for a fixed rate home mortgage offered by mortgage companies like Primary Residential Mortgage, Inc. This type of loan would allow you to budget your money since the monthly repayment amounts are set.
That said, here are the factors that could have an impact on your mortgage repayments:
This refers to the amount that you pay over and above the amount you borrowed. The mortgage lender is responsible for setting this rate. The higher the interest rate, the higher the monthly repayment amounts. The interest amount is calculated daily by the outstanding amount. Although the total interest amount will vary each month, the monthly repayment amount will remain the same if you have a fixed rate home loan.
Lenders Mortgage Insurance (LMI)
This is a type of insurance offered to prospective homebuyers to hasten their home ownership dream without them having to part with a deposit amount that is often the requirement of most financial institutions. LMI affects your monthly repayment if you opt to have the cost of the LMI premium added to your home loan.
Regular lump sum repayments
This refers to the money that you pay in bulk in favor of your home loan from any particular source. While the amount may not affect the amount of money you pay in the form of monthly repayment especially for fixed rate home mortgages, it will significantly reduce the duration of your loan. As a result, you will have a lesser number of monthly repayments to make.
When searching for a mortgage, it is best to have a mortgage broker advice you on the best way forward. Remember that this is a decision that will affect a large part of your life, so it is best that you get it right.