Mortgage is a
home loan which is repaid over a series of years with a fraction of
your income going into the mortgage account. This account has an interest
rate associated with it, so you end up paying more the slower you pay.
Your home acts as the security for the loan. So
typically lending institutions
will only lend you a portion of the total value of your home.
Repayments are made generally on a weekly or monthly basis
as are the compounds of interest. The effect of the mortgage is that the
initial payments make little change in amount owed as the interest has a
greater effect, but as less money is owed the mortgage account drops much more
In order to
reduce you overall repayment you can make higher payments toward the
beginning of your mortgage.
Sometimes when people get a windfall gain they use it make a repayment
on their loan and find that it reduces their overall payments by a much
greater amount. Factors to consider when deciding what repayments you
can afford include:
What are your living costs. These include
the costs of raising a family such as food, education, sports & leisure,
hobbies, gifts, clothing, transport, medical, holidays, maintenance of
house etc and other expenses
What money should you set aside for
Would you also like to save some money.
Are there other capital items or
investments you may like to
purchase (eg a new car, stock market).
When considering a
mortgage, taken into account
should also be factors such as
your job security,
what sacrifices you may have to make in
being able to keep paying the mortgage. But also you want to make sure
the house is right for you.
Is the location convenient (schools,
shopping, exercise habits), is the neighbourhood friendly and safe,
is it the right size for you and your
is it worth itís cost, and does it feel
likelihood of wanting to still be in that
house till the payments are finished and
Alternately you may be purchasing the
house so as to enter the property market and then upgrade as your family
and your income grows