With a stinking economy and increasing costs of living, dreams of buying your dream house receive one blow after another.
Where no other options are viable, the idea of a mortgage plan is welcome and a 40 year mortgage is the perfect deal.
With lower wages, you will hardly qualify for a 30 year fixed rate mortgage hence the need to settle for a cheaper mortgage plan.
But is this mortgage plan ideal for you? Short term mortgage plans have high monthly payments but attract lower interest rates.
On the other hand, long term mortgage plans attract higher interest rates but lower monthly payments.
A long term mortgage will work well if you are operating on a tight budget which may be coupled with unsettled debts.
This is where the 40 year repayment plan comes in.
This mortgage plan involves low monthly payments but with higher interest rates.
But this mortgage product has become very popular with many home buyers.
It is quickly becoming the loan vehicle many buyers rely on to buy their homes.
You will need to consider some factors to be able to manage your mortgage; otherwise, you will succumb under the pressure of accumulating debts.
You need to note the importance of your monthly payments.
To fully service your 40 year home mortgage, you will also need to establish how steady your income is.
Inconsistencies in your monthly income may largely affect how you service your mortgage.
In a way you are a bit sheltered since, as mentioned earlier, such mortgage comes with lower monthly payments.
This is due to the fact that a 40 year loan is spread over a long time.
Home buyers who take out mortgage products with 15 to 30 years repayment terms will suffer the blunt of higher monthly payments.
The 40 year mortgage loan may be the right vehicle to your new home.
However, it comes along with some disadvantages.
In the first place is the fact that you will end up paying for more than you would pay using a shorter term mortgage, thanks to the higher interest.
Another demerit is that very few lenders out there are willing to give out 40 year mortgages.
This is because 15 to 30 year plans have been perceived as the industry standard for a long time now.