Applying for a mortgage is the ideal way to realize your dream of homeownership. There are many choices you will make when getting a mortgage. Among the most important decisions is your interest rate. This affects your overall loan amount, and hence you should be diligent when selecting one.
After getting the best mortgage rate your Utah lender has to offer, you will get several options for your repayment. This encompasses your interest and principal.
Here are the typical repayment options you will select from.
Interest-Only Repayment
With this repayment plan, you will only be required to pay interest on your loan amount monthly. This assures you of low monthly mortgage payments. Your principal, however, remains unchanged. Interest-only repayment is an ideal choice if you are expecting a significant amount of money in the future.
Capital Repayment
After finishing your interest repayments, you will be required to pay your loan capital. Your lender will need to review your repayment strategy to ensure you have money at the end of your mortgage term to make this payment.
Common strategies for mortgage repayment include investments or savings as well as pensions and property investments. You should keep track of your repayment plan to ensure you have enough money to repay the capital.
Combined Interest-Only and Part-Repayment
This repayment option includes paying your interest as well as a small amount of your loan principal. At the end of your mortgage term, you will have a small amount of principal to clear.
Though the monthly repayments for this option might be high, it is convenient if you expect no large payout in future and have no investment plans.
Though these are the typical repayment option in the mortgage sector, terms vary depending on your lender. You can, however, negotiate the best conditions for your situation. With a good interest rate, making your monthly payments regardless of your repayment option will be hassle-free.