At what point should one opt for a home loan?

Home loans are designed to finance any acquisition or renovation.

Owning your own home or undertaking any major expansion of a building are large projects. It is necessary to have the available funds in order to achieve this goal. Home loans are ideal if you plan to buy or renovate a property or any building.

This type of credit allows you to avoid waiting years to build up the funds on your own. Of course, for a long-term debt, such as a home loan, it is necessary to have personal capital, but it is always possible to obtain financing for the full costs associated with the acquisition.

What are the particularities of a home loan?

This is a form of loan granted by a specialized financial institution or a bank. A specific and often substantial amount is spread out over a long period to be repaid in monthly installments. If you wish to purchase one property and sell another property, you can opt for what is called a bridge loan. That is to say that the loan will simply cover the waiting period between the resale of another property or any other form of cash flow and the purchase of your new property.

Concerning the reimbursement, a fixed rate and an adjustable-rate are the most common. This allows you to pay a monthly constant, which is therefore easier to manage, throughout the repayment period. Moreover, the financial institution usually requires a loan guarantee and a personal contribution ranging from 10%-30% of the value of the acquisition. However, this does not exclude life insurance, to better protect the borrower and the creditor in the case of unforeseen circumstances.

Following the method of reimbursement chosen by the borrower, the loan can be broken down into several forms. Thus, the borrower can opt for an installment loan. In this case, your monthly payments will be regressive or progressive depending on your contract. If you already have other loans in conjunction with your home loan, you should choose a tiered loan. With this type of loan, you can consolidate your monthly payments and pay a constant sum. In addition, there is something called a flexible loan that allows you to vary, according to the circumstances outlined in your contract, your deadline. The loan is ultimately advantageous as it allows you to save on your taxes.

Finally, if you choose a progressive or regressive loan, your monthly payments will be reduced or increased progressively according to your contract.

Noemie Palussiere

Par , le Tuesday 5 February 2013

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