No Frills Mortgages – What Are These Home Loans?
If you have done your research and studied mortgage loans, you may now know just how important making lump sum payments are. If not, then you should know that these payments will help you reduce the overall interest rate that your lender will charge you, thus; making your life easier for you while you still have the debt. In addition, these lump sum payments will also speed up the process of paying off the entire loan. However, there is also a drawback to these, which is a possible increase in fixed term mortgage rates. If you think that you will not benefit from the features of a normal fixed rate home loan, then you may want to consider looking at a no frills mortgage.
In a nutshell, a no frills mortgage is a type of loan that does not come with any other features. It offers little to no flexibility at all. This then leads to the fixed mortgage rate of the product becoming lower than that of a normal mortgage loan that comes with full features. Some of the features that are not included in a no frills mortgage include payment holidays and prepayment options. Since this particular type of mortgage product does not have a prepayment option, you will not be able to make regular lump sum payments towards the loan.
There is only a single reason why you may be tempted to go for a no frills mortgage. This is the lower rate. While it is true that this is the only benefit that you will be able to enjoy, you may want to opt for it as long as you know the disadvantages that are associated with it. If you really want to take advantage of this product, you should first consult with a professional broker to assess whether or not it really is the best choice for you.
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