Taking out the right type of mortgage is essential to seal the best deal for your house purchase. The type of mortgage you require heavily depends on your situation and the motive for your purchase. Listed below are the major types of mortgages you can take out.
Self-Employed Mortgage
This type of mortgage is suitable for self-employed people who are searching for a house to buy. However, if someone happens to be self-employed, many services render their expenses under the category of extra income. One of the major advantages of this sort of mortgage is that the approval for this deal will depend on your credit history instead of your business history. The application process itself is fairly simple and easily achievable.
Moreover, nowadays, many mortgage services do not necessitate proof of income. However, if you happen to have a weak credit history, the approval might be hard. Nevertheless, this might be the right solution if you are self-employed and meet the appropriate requirements.
Long-Term Mortgage
Long-term mortgages are for those cases where the loan is supposed to be paid over three or more years and is optimum when the current interest rates are the most viable. This type of mortgage is best suited to those who are on the lookout for a long-term investment. However, a downside of this category is that you might have to pay more even if the interest rates decrease in the stipulated period due to prolonged time. If you are a buyer looking for a long-term investment quite far into the future, this category is the correct fit for you.
Short-Term Mortgage
The opposite of the above mortgage is that this type is for a shorter time, roughly two years or less. A short-term mortgage is a feasible alternative to the long-term option. Under this type, you are offered a much lower rate of interest.
However, this will not be ideal if you plan to hold onto the property being mortgaged for a long time. Additionally, if the interest rates increase during renewal, you might have to pay more borrowing costs than the estimated amount. Suppose you believe an initial low interest rate is a better alternative to the risks associated with increasing rates over time. In that case, this category is best suited to your biases.
Cashback Option
This option permits you to receive cashback when your mortgage is advanced. This option is available under varied conditions—the amount you receive as cashback depends on your mortgage. The average rate ranges from 4 to 7% of the mortgage. You can utilize this cash for associated actions such as moving costs, renovations,
repairs, legal fees, etc. A precondition of this type of mortgage is that you must carry out the entire term despite any potentially negative circumstances. A cashback mortgage is ideal for first-time homebuyers who require extra cash for additional purposes.
The entire list of types of mortgages is much more exhaustive. If you have any queries or need a reliable mortgage lender service, Montreal’s Best Mortgage Brokers can help you find a solution for all your requirements and get you the best deals.
