A mortgage is a home loan traditionally referred to as a bond where the immovable property being bought is used as collateral. The mortgage is repaid with interest included over a specified length of time usually 20 years, but it can be from 5 years to 30 years. A mortgage is obtained when the Buyer is unable to purchase the property in cash.
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There are a number of questions you should ask when you are looking at getting a mortgage:
Getting approved for a home loan before looking for property is a smart move that will make purchasing property easier and quicker. This will help you know what type of property you can afford to buy based on how much can be lent to you.
Required Documentation For Preapproval
In order to qualify for a mortgage you have to be over 21 years of age,
have been employed permanently for a minimum of 6 months,
have no judgments or defaults on your credit profile, earn above the minimum salary requirement as set out by your chosen Bank or Lender.
How Much Can You Afford
Knowing how much you an afford is a very important first step when purchasing property. A good way to figure out how much you can afford is to use the 28/36 rule. The 28 implies that not more than 28% of your gross (before tax) monthly household income should go towards property costs, interest and insurance included. And the 36 implies the loan shouldn’t exceed 36% of your gross income. Consider how car, credit card payments etc. can affect how much you can afford.
Deposit For Property
Deposits for property can range from 5 to 20% of the purchase price. This information can be obtained from the Seller.
Types Of Mortgages (Bonds)
Classifications of Bonds