Standard
'principal and interest' home loans
Most people take out a
standard home loan, where you make regular
payments to cover the interest on the loan as
well as the principal amount borrowed. This
usually takes place over an agreed time, for
example, 25 years. You can generally repay the
loan in full at any time, although you might be
charged a fee.
'Low-doc'
loans
If you take out a 'low-doc'
(low documentation) loan you won't need to give
your lender or mortgage broker as many documents
to prove your income, assets and liabilities.
Low-doc loans can help if you would not qualify
for a standard loan, but there are usually some
strings attached, so it's vital you understand
what you're getting into. It's a good idea to
weigh up the extra costs and potential risks
involved in a
'low-doc' loan.
Line of
credit mortgages
The idea of paying off your
home loan more quickly is very appealing and is
used by some mortgage brokers to attract you to
their line of credit mortgages.
Reverse
mortgages
Reverse mortgages allow you to borrow cash
against the value of your home. You usually
don’t have to make regular repayments until you
leave and move into care, sell your home or die.
When the loan ends you, or your estate, must
repay what's owing, usually out of the proceeds
of the sale of your home.
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