Which Loan Term is the Best Financially?
Mortgage repayment is a combination of the principal and interest rate charges. The longer the loan term, the more time interest has to accumulate. This makes the mortgage more expensive.
The 30-year mortgage is the norm. Therefore, homeowners have accepted that they will pay 30 years’ worth of interest rate charges. Most homeowners lived in their homes for 30 years too. Thus, paying a mortgage and its interest rate charges for this duration becomes like paying rent toward a property that becomes yours outright at the end.
Several things have changed in the last decade. The best loan term is the one that the homeowner can repay without too many financial burdens and hiccups.
It’s possible to obtain a shorter loan term such as 15 years. It’s also possible to stretch it out to 40 years.
A great way to see how repayments change is to use our Mortgage House mortgage calculator online. Input the loan amount and the interest rate charge. Then adjust the loan length. You’ll see that a short mortgage length carries a higher monthly repayment but is less expensive.
On the flip side, a longer mortgage carries a smaller monthly repayment but it’s more expensive. Nonetheless, some homeowners benefit from the longer term.
Best Loan Term Conclusion
The best loan term for most homeowners remains 30 years. Those who believe that they can repay their home loan sooner can. Simply obtain a mortgage that includes this feature penalty-free. To discuss your options, contact our Mortgage House loan specialists.