These days, many banks and financial institutions are ready to offer mortgage loans to people with good credit history. Moreover, they are ready to offer different types of mortgage loans that suit different people with different needs. The following points present some of the different varieties of such loans that banks and financial institutions offer:
1. Term Loans with Fixed-Term Repayment: These are normal term loan schemes where you get a loan for a fixed duration. The rate of interest can be fixed or can vary based on some benchmark rate.
2. Overdraft-Loan: These are loans in the form of current account overdraft where surplus funds can be parked and therefore interest burden can be minimized. Every month, the overdraft limit is reduced as per the Equated Monthly Installment (EMI) amount.
3. Flexible-Loans: These are loans with a fixed rate of interest for one part of the loan and a floating rate of interest for the other part. It can be designed as per the convenience of the applicant and up to what is allowed under the rules of the bank / financial institution
4. Fixed Interest Loan: These are loans with a fixed rate of interest for the entire duration of the loan. It is well protected against market rate fluctuations. Generally, these rates are somewhat higher than the market rate.
5. Floating Interest Loan: Floating rate of interest is the rate that is linked to the Central Bank's (Federal Reserve) prime lending rate. If the Central Bank increases (decreases) the prime lending rate, then the bank / financial institution also increases (decreases) its interest rate.
Generally, it is advisable to go for floating rate of interest as the rates will be lower when the economy