Many first-time buyers purchase what is commonly known as a "starter home" and there is nothing wrong with this approach. Before you know it, you'll have a place to call your very own, a place to entertain, a place to decorate, a place to raise a family. The starter home is a great start, and a great way to get started in your long-term real estate investment. It really is an exciting time!
Borrowing to purchase is a great way to start. There are many different types of mortgages available. Even people buying millions of dollars' worth of property borrow to make the purchase. If you don't have the 20% down payment for a conventional mortgage, you can get a high ratio mortgage, combined with mortgage default insurance, that allows for a smaller down payment. Find out more about down payment and what you can afford.
If you want to estimate the maximum mortgage you can afford, use the following easy-to-use mortgage affordability calculator.
Deciding which type of mortgage is right for you will depend on what you can afford. Prepayment privileges are another important part for borrowers to consider. These arrangements allow you to pay money against the principal, reducing the total amount of interest you'll ultimately pay.
Amortization refers to the time period in which the mortgage is assumed to be paid. A common amortization period is 25 years. This means interest and principal payments are set as if you were paying the amount borrowed over a 25 year payment schedule. Obviously, the shorter the amortization period, the less interest you will pay. Learn more about arranging mortgage options available and get familiar with mortgage terminology.