The Basics of Home Loan

It is important to have a home especially if the family is growing. Renting an apartment is not advisable because it will not be yours at the end of time. It is better to pay mortgage every month than paying your money on monthly rental. If you are worried that you cannot afford it, there are loans that you can consider to assist you with the payments.

However, you should be aware that the National Development is tightening properly loan rules implemented by financial institutions. This move seeks to guarantee a steadier property market. This is expected to be permanent. The Central Bank commenced LTV (Loan to Value) and TDSR (Total Debt Servicing Ratio) frameworks. Furthermore, it is said that loan repayments every month should not exceed 60% of the borrower’s income. This can promote financial awareness among borrowers.

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If you consider mortgage loan, you should be aware of the other costs that is included in your monthly payments or instalments. You should deal with:

Principal

Principal refers to the amount of money you borrowed to buy your home. Financial institutions will first give you down payment to reduce the amount to be financed.

Interest

Interest rate refers to the charges of the lender for using the money you borrowed. The interest rates vary depending on the financial institution.

Taxes

Property taxes are levied based on the percentage value of the house. Taxes are usually used by the community to build infrastructures and other projects. Property taxes should be paid even after the mortgage is paid.

It is better if you can pay your home without the help of financial institutions. If you can afford it, you should pay it in full so you will not worry about the principal and interest. It can be quite confusing.


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