Mortgage loans play a key role in purchasing the property. With the upsurge in the market rates, buying a property is not completed without mortgage. Even if you decided to buy Dubai Creek property for sale, you still need funds to finance the purchase. Therefore, before home hunting, the search for the right bank or right lender should be started. There are different types of mortgages provided by the banks which can vary according to the borrower’s suitability and preference. You need to do a complete research on these types of mortgage loans to have a clear picture. Then, opt for the right one, which complements your needs and predilection. For your convenience, we gather different types of mortgage loan to enrich your knowledge about them.
Fixed Rate Mortgage
This is one of two biggest and traditional types of mortgage loan. As the name suggests, the monthly installments are fixed in this type. You know exactly what you have to pay on monthly basis leaving no stone unturned. The interest rate is fixed throughout the loan plan. Pre decided flat rate will be followed during tenure.
Variable Rate Mortgage
This is the other of the two biggest types of mortgage which is totally opposite to the first one. In this type, fluctuation of rates is predominantly observed. Interest rate and flat rate vary dynamically and have direct impact on your monthly finances. These variations are controlled by Emirates Inter Bank Offered Rates (EIBOR).
In this type, you are provided with the discount on loan as a welcome offer for starting months. Otherwise it would have been the best option among all other types of mortgage loan.
Whenever there is a malady, there is a control or antidote for that. When something is introduced, its control is introduced as well. To avoid big lapse of variations or fluctuations of variable rate mortgage, capped mortgage is presented. It will put a fix or a bracket on fluctuation limit as the monthly interest rate will not go beyond this cap. But it is to be noted that it is for just few months of start.
If the borrower needs an additional fund or there are low interest rates on new loan, then he can consider this type of mortgage. As it allows you to get mortgage on existing loan. You can also transfer your loan to a new lender. Another name for this type is “Remortgage’.