Different lending institutions have different kinds of mortgage loans. Here are some of the common ones:
- Owner occupier residential
It is for an individual who has identified a property he would like to purchase. Various banks are particular about the location of the property. Certain areas are not covered. Usually, a bank funds 90% and the individual is expected to show commitment by depositing 10% of the value of the property.
- Home construction
This is for someone who owns land and would like to build a house on it. Banks will fund between 75 – 80% of the total cost of construction. Again banks are very particular about the location of the property.
- Rental property construction
Support is just like for the home construction only that the property is for commercial purposes. It is limited more to urban areas and selected locations only.
- Cash against property
This is available for those who already own property and they would like to unlock the capital invested in the house. Different types of properties and their locations will determine the loan value that the bank will provide. For example, residential houses in urban areas will attract better funding than flats or houses in small, rural towns.
- Second mortgage
This is for people who already have a mortgage they are paying and would like to take a second one. Usually this would be for the purpose of refinancing the first loan. The loan value is dependent on type of property and where it is located.
Interest for mortgage loan can either be fixed-rate or adjustable-rate. With a fixed-rate mortgage, the interest rate stays the same over the life of the loan. Some banks may offer part fixed, meaning that you can choose say for a period of 1-5 years to pay fixed rate and then after that you can choose another period of fixed rate or start on an adjustable rate. Adjustable rate may change upwards or downwards depending on changes with the base rate. Ask the lending institution the interest terms of their mortgage loan.