Buying a home is a significant investment, requiring careful consideration of factors such as property selection and financing.
Choice properties are generally priced higher but possess great potential for passive income and capital growth. Not all homes in prime locations generate the same amount of profit for an investor. Ultimately, an investment property’s profits depend on the costs of financing.
Financing your home
Buying a home is often made possible through mortgages and loans obtained from banks and mortgage lenders. Home financing is a decision that can have a significant impact on your finances. Thus, it is necessary to choose the right loan product which answers your needs and circumstances.
Parts of a loan
A loan consists of the principal, interest rate, term or loan period and repayment schedule.
The principal refers to the amount you borrow from the bank or mortgage lender. Its interest rate is the fee a lender charges for the use of its money. Interest is expressed as a percentage of the principal and can be fixed or variable.