Most people dream of owning a home. But, applying for a mortgage may seem like a daunting process. How do you decide which among the available deals would best suit your needs? Are you being charged the right mortgage broker rates? To help you decide, discussed below are some tips.
Do not ignore the terms and conditions
It is always a good practice to pay attention to the fine print. However, when one finds a deal with the lowest interest rate, reading the T&Cs somehow slips out of their mind. Yes, the interest rate is an important factor, but you need to look at other factors as well. You need to see if the terms and conditions are flexible.
If you choose a scheme with terms and conditions that are rigid, you may not be well prepared for the uncertainties lying ahead. In a single day, a huge change may happen – you may have to shift to a different city, you may get a divorce, or you may want to shift to a bigger place. What will happen to the mortgage, in such cases? Hence read the terms and conditions well, so that you are aware of how stringent the terms of your mortgage are.
Take the help of a mortgage broker
In any field, taking advice from an expert is a highly recommended action. If you have a reputed and experienced mortgage broker with you, you may be able to negotiate better. Scoring a good deal might be difficult if you try to do it all by yourself. But make sure you can afford the mortgage broker rates. Better the broker, higher are the mortgage broker rates.
Also, since buying a piece of property involves huge amounts of money, it is better to compare the various options in the market. Looking at the process, it is easy to be tempted to accept the rate provided by your current bank. However, do not forget that there are always better deals around. The time and efforts spent on comparison and analysis will be duly rewarded in the form of the thousands of rupees you will save if you have selected the best deal for you.
Fixed-rate or variable rate mortgage?
There are two kinds of mortgage rates – the fixed rate and the variable rate. In a fixed-rate mortgage, your payment remains constant for the whole of your mortgage tenure. But with a variable rate mortgage, how much you pay depends on the prime lending rate charges. Thus, the amount you pay may not stay constant throughout the mortgage.
Experts recommend choosing a variable rate mortgage as it has proven to be cheaper in the past. However, you know what works best for you; so, the final call is yours.
Some people do not mind selecting a fixed-rate mortgage because they want to be sure how much will they exactly be paying for the entire duration of the mortgage – so that they can plan their budget around it. However, take note that, in a fixed-rate mortgage, you will be paying more money as interest than in a variable one.
Before selecting a scheme, ask yourself whether you have a tight cash flow if you can afford to have fluctuations in your payment and are you financially ready to handle the ups and downs. Depending on your answers for the same, select a plan that best suits your situation.