Owning your first house and you need a Bond, What are my options?
Bonds fall into two different categories ? those that are based on fixed interest rates and interest rates that fluctuate during the loan's duration dependant on terms agreed by the lending bank and borrower where the loan was issued. Fixed interest rates are more popular, because the borrower can stay connected with the loan.
Fixed rate bonds have existed for years and will continue to exist, because individuals, especially home owners, want a steady interest rate. They are not willing to do the math and break down the interest throughout the years. They just want one, solid rate of interest.
Fixed rate bonds run between fifteen and twenty five years on average. Some people prefer fifteen year loans because they handle the higher equity and monthly payments. Short term fixed interest rate loans are ideal because the interest to be returned on the loan is lower.
Obviously, it would make a very ideal situation if clients could individual call out a number of years and the bank would offer a bond for that period, but that is not the case. Banks are willing to offer bonds in five year increments, staring with fifteen which is becoming more popular. Another common number is twenty five years which is a reasonably agreement between the bank and client.
While I mentioned earlier that most individuals are drawn to fixed rate bonds, it should also be noted that a certain group of people prefer interest rates that fluctuate. This is probably the appropriate and smart way to handle a loan. Individuals who prefer this type of bond can bend and break with the economy and enjoy more flexibility with the bank as the bond progresses.
For example, a homeowner can request their interest be recalculated. The bank is obliged to handle this request and will gladly adjust the interest rate for a fee.
On the opposite end, the bank will constantly adjust the interest based on a decreasing economy. These increased interest rates are tough to handle but it comes with taking out a loan.
On average, people prefer fixed rate mortgages because they find them simpler and less hassle.
Fixed rate bonds have existed for years and will continue to exist, because individuals, especially home owners, want a steady interest rate. They are not willing to do the math and break down the interest throughout the years. They just want one, solid rate of interest.
Fixed rate bonds run between fifteen and twenty five years on average. Some people prefer fifteen year loans because they handle the higher equity and monthly payments. Short term fixed interest rate loans are ideal because the interest to be returned on the loan is lower.
Obviously, it would make a very ideal situation if clients could individual call out a number of years and the bank would offer a bond for that period, but that is not the case. Banks are willing to offer bonds in five year increments, staring with fifteen which is becoming more popular. Another common number is twenty five years which is a reasonably agreement between the bank and client.
While I mentioned earlier that most individuals are drawn to fixed rate bonds, it should also be noted that a certain group of people prefer interest rates that fluctuate. This is probably the appropriate and smart way to handle a loan. Individuals who prefer this type of bond can bend and break with the economy and enjoy more flexibility with the bank as the bond progresses.
For example, a homeowner can request their interest be recalculated. The bank is obliged to handle this request and will gladly adjust the interest rate for a fee.
On the opposite end, the bank will constantly adjust the interest based on a decreasing economy. These increased interest rates are tough to handle but it comes with taking out a loan.
On average, people prefer fixed rate mortgages because they find them simpler and less hassle.
About the Author:
Graham McKenzie is the content syndication manager at BondCredit.co.za South Africans leading Bond Originator
posted by Debt Consolidation Loan at
5:52 AM
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