Sunday, September 13, 2009

How To Select Mortgage Loan

Housing loan a.k.a Mortgage loan
Definition of mortgage
possible root from the French verb "mourir" meaning to die. The English word "mortgage" refers a home owner's loan that is usually with you until you die. Usage of the French root is supposed to make it sound fancier than "loan" - but it doesn't really.
J'ai mort - meaning "I am dead"
Credit to urbandictionary
A dream home is your resting place while old. Planning to buy a house is rather easy, but you can burn a big hole in your pocket without proper knowledge in the industry. Remember not to bear any debt exceed your capacity, early termination penalty will be costly.
3 Simple steps of financing your dream house (Used in most cases)

What to consider in a loan?

Besides pricing, other features like flexible repayment terms could balance the scale or even translate into greater loan savings. Financial Institutions generally offer housing loan packages either in the form of a term loan, overdraft, or a combination of a term loan and overdraft.

Fixed rate or Floating rate?
As in the fixed rate financing, the rate is fixed and there will be no changes in repayment amount and tenure.
While with the floating rate financing, the repayment amount and/or tenure may change due to the fluctuation in BLR (Base Lending Rate).
If for me, i would choose the fixed rate financing although it's more expensive. However, considering the trouble broughtforward by rescheduling the loan and adjustment of BLR in the future when the economy return to healthy state.
I suggest you to discuss thoroughly with your in charged mortgage officer about the issue since buying a house is not similar with buying a soft toy. Any soft of negligence may be costly.
Insurance? Peace of mind?
Ever heard of housing insurance? The most common one is fire insurance and MRTA (Mortgage reducing term assurance)
In short, fire insurance cover your property against natural disasters (eg: flood, fire, riot, strike, and malicious damage). If you live in a condominium or apartment, you need not buy the fire insurance as the Management Corporation (MC) had it managed properly. Make sure you have the sub-certificate of the master policy from MC.
MRTA refer to the coverage for full settlement of the outstanding balance of the housing loan with the financial institution, in the event of total permanent disability or death of the borrower.
Both insurance also give a peace of mind by burning even my cloth. (-.-'). I stressed again that Housing Insurance is essential.

Credit to Bankinginfo =)
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