What Are The Best Mortgage Options In New Zealand To Purchase A Property?
Have you found the right property to buy? Good, you have achieved half milestone. Get ready to cover another half milestone. Finding the right mortgage type is as crucial as finding the right home for you. As you are going to pay a mortgage for a long duration, for first-time investors must know about the right type of mortgage. New Zealand property buyer’s agent helps to choose an appropriate type of mortgage according to your monthly income.
What is a mortgage?
The loan you take to buy residential or commercial property is called ‘’mortgage’’. ‘’Principal and Interest’’ are two components of your mortgage payment. The total loan amount is referred to as ‘’Principal’’. The additional amount charged by lenders for borrowing that money is known as ‘’Interest’’. The amount of interest rate varies annually due to fluctuation in the market. However, an expert property buyer’s agent analyzes your financial status and guides you in selecting the best mortgage type with the lowest possible interest rate.
In this article, you will get to know about 6 different types of mortgage. Pick the one that suits you the best.
1# Table mortgage:
Table loan is the most common type of mortgage opted by first-time investors. The lenders go for a term of 30 years. Usually, the application fee for table loans is $1000. It is easy for lenders to pay regular payments. The payment amount remains the same unless the floating rate changes. If you have an irregular income source, you can face difficulty paying fixed regular payments.
2# Offset mortgage:
According to the experienced property buyer’s agents, you must go for offset mortgage options, if you want to pay less interest rate.For example, if your mortgage amount is $500,000 and your have $50,000 savings, you will pay interest rate on ($500,000-$50,000=$495,000) $495,000. There is no fixed term to complete the payments of offset loans. Generally, the interest rate on loan is higher than interest on savings in your bank accounts. It is the only disadvantage of an offset mortgage.
3# Revolving credit mortgage:
Your regular payments are going to be automatically deducted from your bank account unless you have chosen a revolving credit mortgage. People with an uneven source of income can easily go for this type of mortgage.It also reduces the amount of tax and interest rate on saving accounts. Although it seems tempting yet it requires a lot of discipline to ensure on-time payments. The only downside of a revolving credit mortgage is that you remain in debt for a longer duration.
4# Reducing mortgage:
You pay the same amount of principal with each payment and a reducing amount of interest rate each time. Usually, initial repayments are very high and reduce over time. If you think your income may drop in the future, it is suitable for you to go for the reducing mortgage. However, analyze whether you can pay high repayments or not before choosing the reducing mortgage.
Choose a stress-free mortgage option by getting complete consultation from New Zealand Property Buyers.