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The Basics of Mortgage

There are so many different things that you need to understand when it comes to mortgages, however, it is really difficult to get them all at once. You could say that a mortgage is a maze in itself. Which is why it is really important to get a better understanding of the basics beforehand.

If you are interested in learning the basics mortgages then this is the article that you need to read. At https://perthbroker.com.au/mortgage-broker-mandurah/ can read up in detail about mortgages.

The first thing that you should know about is the LTV, it means Loan To Value and is expressed in a percentage. It is basically representing the value of the property which you can borrow. For example, if the LTV value is around 90% then you borrow an amount worth 90% of the property. That means that you have to make a payment of only 10%. It is a general rule that the higher the LTV value the higher is mortgage rate.

Another thing you should know about is the rate of the mortgage, it is either fixed or variable. The fixed-rate is ideal for people who have strict budgets and cannot afford any rise in the repayments. With a fixed-rate mortgage one can have peace of mind that you only have to pay the same amount each month regardless of the time.

On the other hand, a variable mortgage can have changes in the amount of payment that needs to be paid, usually, it increases with time. Although there are various cases in which the rate can decrease as well. It is a special kind of deal called the tracker mortgage. In this case the rate either increases or decreases with an increase or decrease in the base rate of Bank of England.

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