I want to own a home: Which bond works for me?
Bonds fall into two categories ? bonds with a fixed interest rate and bonds with interest rates that fluctuate during the loans duration. Fixed interest rates are more popular because the client always understands where they stand with the interest.
Fixed rate bonds have existed for years and will continue to exist, because individuals, especially home owners, want a steady interest rate. They are not willing to do the math and break down the interest throughout the years. They just want one, solid rate of interest.
Most fixed rate bonds run between twenty to thirty years, which is definitely a long time. A lot of people would rather stick to something around fifteen years, which is fine if they have a higher than average equity along with an income sufficient to meet the higher monthly payments.
Obviously, it would make a very ideal situation if clients could individual call out a number of years and the bank would offer a bond for that period, but that is not the case. Banks are willing to offer bonds in five year increments, staring with fifteen which is becoming more popular. Another common number is twenty five years which is a reasonably agreement between the bank and client.
Individuals sometimes take a liking to bonds where the interest rate fluctuates because they can stay in close connecting with the interest payments. Some bonds begin with a fixed rate of interest over the first ten years or so. People like these bonds because they can calculate how much interest and how much interest they are paying.
Individuals also have the right to ask the band to adjust the interest rate of the bond. This scenario becomes viable when the market conditions improve and the high interest rate is not longer valid. The bank will obliged, but must charge a one time fee for this service.
On the opposite end, the bank will constantly adjust the interest based on a decreasing economy. These increased interest rates are tough to handle but it comes with taking out a loan.
On average, people prefer fixed rate mortgages because they find them simpler and less hassle.
Fixed rate bonds have existed for years and will continue to exist, because individuals, especially home owners, want a steady interest rate. They are not willing to do the math and break down the interest throughout the years. They just want one, solid rate of interest.
Most fixed rate bonds run between twenty to thirty years, which is definitely a long time. A lot of people would rather stick to something around fifteen years, which is fine if they have a higher than average equity along with an income sufficient to meet the higher monthly payments.
Obviously, it would make a very ideal situation if clients could individual call out a number of years and the bank would offer a bond for that period, but that is not the case. Banks are willing to offer bonds in five year increments, staring with fifteen which is becoming more popular. Another common number is twenty five years which is a reasonably agreement between the bank and client.
Individuals sometimes take a liking to bonds where the interest rate fluctuates because they can stay in close connecting with the interest payments. Some bonds begin with a fixed rate of interest over the first ten years or so. People like these bonds because they can calculate how much interest and how much interest they are paying.
Individuals also have the right to ask the band to adjust the interest rate of the bond. This scenario becomes viable when the market conditions improve and the high interest rate is not longer valid. The bank will obliged, but must charge a one time fee for this service.
On the opposite end, the bank will constantly adjust the interest based on a decreasing economy. These increased interest rates are tough to handle but it comes with taking out a loan.
On average, people prefer fixed rate mortgages because they find them simpler and less hassle.
About the Author:
Graham McKenzie is the content syndication manager at BondCredit.co.za South Africans leading Bond Originator
posted by Debt Consolidation Loan at
5:13 AM
0 Comments:
Post a Comment
Subscribe to Post Comments [Atom]
<< Home