What Do You Need to Know About Mortgage Interest Rates?

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Everybody, whether old or young, hopes to acquire a property someday. Buying a house is one of the largest investments anybody can ever make, due to the sum of money needed in order to make the purchase.

Some people have the ability to purchase properties outright with their savings, while a large number have to secure mortgages in order to buy. Mortgages are loans used in acquiring real estate, where the property being acquired is used as collateral. In Ghana, mortgages can be acquired from banks and other financial institutions.

In this post, Jumia House Ghana provides insight on mortgages and the types of interest rates they offer.

An interest rate is the amount of money paid on the loan or the cost of the loan. There are two types of interest rates: fixed and variable. The type of interest rate of the mortgage facility is left to the individual to choose.

Fixed Interest Rate

As the name implies, the interest on the rate of the mortgage does not change over the lifetime of the loan. Fixed rates are a good choice if the individual taking the loan believes interest rates are likely to move up. Even when they increase, the loan will remain at a lower interest rate.

Variable Interest Rate

With this type of interest rate, the monthly payment may rise and fall over time with the inflation rate. This could be a good option if you believe the interest rate will head downwards, since repayments are reduced as the rate falls. However, if interest rates start to rise again, your monthly repayment shall rise accordingly. It is important to stay educated on the rate of inflation and research how this has fluctuated in recent years, before making your decision.

Steps to acquiring a property

  1. Identify a property.This can be done by the individual alone, by a developer, a real estate agent or with the help of the mortgage provider.
  2. Compare prices. It is very important to compare the price of the properties you have identified with other houses in the same neighbourhood to ascertain if you making the right kind of investment.
  3. Consider the features. Location, quality of construction, room sizes, and proximity to your place of work or schools need to be considered when buying the property.
  4. Research, If you are making a long term investment in a property, it is important to find out about the rent of other properties in the area and assess the potential value of the building you are purchasing.
  5. Seek advice. For both residential and investment properties, seek the advice of an expert.
  6. Negotiate. After identifying the property, negotiate the price, agree on payment terms and pay for the property. The mortgage can be used to pay for the property.

With mortgages in Ghana, repayment includes the interest and that is deducted from the individuals’ earnings each month. The repayment period can last up to about 20 years, depending on the individual although specialists advise individuals to stretch the repayment period so they do not feel burdened.

 

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Comments

  • Q&A: What Is The Difference Between a Fixed Rate and an Adjustable Rate Mortgage Loan? – meQasa blog
    12 July, 2018 10:12

    […] Mortgages are loans acquired to purchase real estate. A number of financial institutions in Ghana, such as Ghana Home Loans and banks including HFC and Ecobank offer this type of loan to individuals and companies. […]

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