The Types of Mortgages
There are a number of different mortgage types available. The right one for you will depend on what you can afford and how you wish to manage your finances.
The term and the repayment structure you choose will make a big difference to the way you will repay your loan.
Table Repayment - The most common loan type, where early repayments are mostly interest with a small amount of principal. As you pay off your loan, this gradually reverses.
Reducing Repayment - You pay the same amount of principal in each installment. Therefore the size of your instalments reduces over the term of your loan.
Zero and Low Start Mortgages - This type is available where interest only is being paid initially then after the selected period principal is paid as well.
Revolving Line of Credit (RLOC) - This is a way of structuring the loan to make the most of surplus money to temporarily reduce debt and therefore interest payments on borrowings. It is best suited to those on a higher income who are good budgeters.
Interest Only - Means what it says. Interest only is payable on the loan amount (no principal is repaid). Commonly used with investment properties. |
