Traditional Mortgages vs Self Build Mortgages

Mortgages are one of the most important things to understand when deciding to purchase a home. Now there are a couple of different types of mortgages that suite most people’s needs. These mortgages are the self build mortgages and a traditional mortgage. Let’s explore both of these types of mortgages and see what one is best for you.

Traditional Mortgages

Traditional mortgages come in a couple of different plans that are suitable for individuals. The most popular of the traditional mortgages is that of a 30 year fixed. This means that when you apply for the mortgage you are getting a one lump sum to purchase the property at a specific interest rate. This is great for people who want to have a fixed monthly payment that never changes for the life of the mortgage.

Another type of traditional mortgage is on calla ARM or a flexible rate mortgage. When you apply for this type of mortgage it usually consist of a lower monthly payment which will adjust and go up at certain times. So, for example you take out a 5/3 arm mortgage what happens is that for the first 3 years your interest rate is set to the standard. Then every 3 and 5 years the interest rate is adjusted to the current market conditions. This can either help you if the rates are going to go down but can also increase your payment if the rates go up.

Self Build Mortgage

Self build mortgages are a lot more e flexible. They are great for people that are looking to build a home or have a more capitol to put down up front. The main difference between a self built mortgage and a traditional mortgage is that the money is released in stages instead of one bug lump sum up front. This is an excellent type of mortgage for someone looking to build their own home.

If, you are building your dream home a self build mortgage is the way to go. Although it requires more capitol up front you save a ton of money on the initial loan because you are not paying for as long. Building your own home means you can have the artistic expression to truly make the home yours.

Before approving a self build mortgage there are a couple of things that lenders will need.

1. Proposed Construction Plan

2. Properly insured and professional builders

3. Asses the Value of the land

4. Complete itemized list of construction materials

Even with the prospect of more legwork on your part to have the loan properly approved it is well worth it. In the end you can have the house of your dreams exactly where you want it and a small mortgage that can be paid off in 10 years instead of 30.

More by this Author


Comments

No comments yet.

    0 of 8192 characters used
    Post Comment

    No HTML is allowed in comments, but URLs will be hyperlinked. Comments are not for promoting your articles or other sites.


    Click to Rate This Article
    working