Have you decided to buy a home of your own? If your answer is yes, you must be well aware of the fact that it involves a lot of money. You are taking a mortgage loan for which you have to make monthly instalments. Are you prepared for the expense? While planning to purchase a house or an apartment it is very important to find out ways and means to curtail prices.
Traditional mortgage or Reverse mortgage: which one to choose?
Whilst applying for a mortgage, you have the options to seek for either the conventional mortgage loan for home or opt for the reverse mortgage. Do you have any idea about the latter? Well, before going into any comparison between mortgage versus reverse mortgage, you need to know about the two mortgage types.
What do you know about the traditional mortgage?
A conventional mortgage is applied when you purchase a home and refinance it. Basically, you will borrow money from banks or financial institutes in order to make the purchase. In exchange of the money you borrow, you promise the lender to pay back the money you have borrowed along with the interest added within a stipulated time period.
You seek to finance for the home that you already own
A reverse mortgage involves the borrowing of cash to purchase the home that you already possess. This type of mortgage has become very popular among loan seekers. More and more people are even opting for it. The reason is that the cash that you have currently can be utilized for other expenses and you repay the loan when you die or want to sell the home.
There are no monthly installments for reverse mortgages
When you have a traditional mortgage loan for your home, you are required to pay monthly installments. On the other hand, reverse mortgages don’t demand to pay any monthly mortgage EMIs. Over the years, the loan balance will increase with the adding up of the interest and there will be a decrease if the home equity.
Higher down payments are applied to the reverse mortgage
There are several individuals who purchase a new home and make use of the reverse mortgage. When compared to the traditional mortgage, you have to pay the higher down payment for the reverse mortgage. The best part about the reverse mortgage is that there is no hassle with the mortgage payments every month. In case, you have any queries, you can get in touch with Harlands London estate agent and seek home mortgage.
Factors influencing the mortgage loans
Basically, the reverse mortgage is designed for the senior citizens or the elderly people. They usually want to get access to their home equity and the reverse mortgage allows them to do so. There are certain factors involved while seeking for a reverse mortgage. Some of them include:
- Your age (you must be 62 years or older)
- You must pay off all your past mortgages.
- Your financial requirements and needs.
- The financial goal that you aim for.
- The duration of stay in the home.
Do you have plans to buy a home, if you have, then you will require a mortgage, right? Apart from the traditional mortgage loan, you can opt for the reverse mortgage as well. Here you will get the best comparison between both types of mortgages.