The Orchids, Tulips and Chrysantheums of Mortgagelandia: The Types of Mortgage

If there are different ways possible for Paris Hilton to become world famous sans her home made movie thoughtfully provided by her ex-boyfriend and different types of mammals roaming the wilds of Africa, then definitely, there are different types of mortgage for you, law-abiding, debt ridden citizen that you are, to choose from. Before taking out a mortgage on your condo unit, Malibu beach house or your Orange County mansion, its essential for you to know the different types of mortgage there is. Like stilettos are simply for the sexy and self-assured and Ms. Emily Posts etiquette book just aint Eminems favorite pageturner, a certain type of person is more suited to a certain type of mortgage. Although we can divide mortgages by different methods like duration of loan, this article would be tackling the types of mortgage according to method of payment or the stipulations concerning the type of mortgage youre interested in.

Fixed Rate mortgage this type of mortgage requires you to agree on a particular rate and pay accordingly. This is one of the most common forms or types of mortgage because its very easy to understand, even for a newbie in the world of finance. Also, more often than not, this type of mortgage has a fixed duration. Lastly, the longer the duration of loan, the higher the rate.

Base Rate Tracker mortgage this type of mortgage is somewhat tricky because your rate is based somewhat or fully on the Bank of Englands base interest rate.

Capped Rate mortgage this type of mortgage is ideal if you know that youll be in a tight situation for a certain period of time and consequently desire lower monthly payments. Capped rate is like the price ceiling of athletes --- their salary (that would be rate for you) can never go beyond the price ceiling set by the people in authority (and thats capped rate for you). The downside is that after a specific and agreed period of time, you go back once more to the standard rate.

Discount Rate mortgage this type of mortgage is quite self explanatory. A lender offers you a discount. This, therefore, makes the rates lower than the Average Lender Joes rates. But similar to capped rate mortgages, this type of mortgage has a set period of time --- you enjoy the discount only temporarily but be sure that sadly, everything goes back to normal soon.

Variable Rate mortgage this type of mortgage is the authors least favorite because the rate is totally dependent on the lenders inclination.

There are other types of mortgage but are specially intended for people like the ff: guarantor mortgage is meant for young professionals who are just starting out; offset mortgage is the type of mortgage thats specifically provided for people with savings; cashback mortgage is the type of mortgage for people who need extra dough to build their dream homes, second mortgage is the mortgage you take out on a property that has already been previously mortgaged and many, many others.

Now that youre done with Mortgage 101, you are ready to finally face your bank manager, eloquently state your situation and politely request for the type of mortgage you want. And last but certainly not the least, remember: its not enough to just know about the different types of mortgages. Be sure to know whats best for you, too.