| A mortgage is a loan that is paid back over a set | | | | shorter period of time. The borrower can also choose |
| period of time. Taking a mortgage therefore involves | | | | a bi-weekly payment option rather than a monthly one. |
| paying a certain amount as interest in addition to the | | | | This reduces the period of the loan, and thus results in |
| principal borrowed. Mortgages can be broadly | | | | lower interest costs.Various kinds of adjustable rate |
| classified into two types based on the interest rates. | | | | mortgages are available. In the case of a capped |
| These are fixed rate mortgages and adjustable rate | | | | interest rate, the maximum interest rate to be paid is |
| mortgages. Most financiers currently offer a number of | | | | fixed. The lender cannot demand more than this, even |
| variations of these two basic types of mortgages.The | | | | if interest rates go up. In the event of interest rates |
| monthly interest payments remain unchanged through | | | | falling, however, the borrower pays less.Discounted |
| the whole term in fixed rate mortgages. Thus the | | | | rate mortgages have an initial predetermined period |
| borrower does not encounter the problem of having to | | | | when the interest rates are reduced. At the end of this |
| make unexpected large payments. Fixed rate | | | | period they revert to the standard rate. First-time |
| mortgages are usually taken for 15 or 30 years, | | | | buyers may find this an attractive option. In variable |
| although other terms are also possible.Although the | | | | rate mortgages the rate of interest changes with |
| monthly payments may be lower, the borrower pays | | | | fluctuations in the bank rate.Thus, a wide range of |
| more as interest on long-term loans as opposed to | | | | options is currently available for those who wish to |
| shorter-term loans. A short term also means that the | | | | apply for a mortgage. |
| buyer gets full ownership of the property within a | | | | |