Mortgage Loan Interest and Flexible Mortgage

Not many people want to be indebted to a lending institution or a bank in their lifetime. Given a chance, anyone would surely want to erase all vestiges of debts such as that of the mortgage loan and other loans. Yet, often some people don’t have any choice but to avail of mortgage loan, despite the knowledge that this loan will tie them up to a debt for several years. The reason is that it is their only hope of achieving and satisfying their basic need of having a shelter which they can truly call their own.

In the hierarchy of needs delineated by Abraham Maslow, he included in the basic needs of human beings the need for shelter aside from food and clothing. Hence, no one can really escape the innate desire to have a home, because it belongs to the three basic needs that have to be satisfied before a person can rise to the occasion of fulfilling other higher needs.

Complicated Computation of Interest
If you, for example, live in Melbourne and you want to have an idea on how the interest accrues and is calculated on a mortgage loan, then you should immediately find Mortgage broker Melbourne-based whom you can trust to explain to you the rudiments of how the mortgage interests are calculated. Most people only know the principal balance that they are going to pay. Yet, they don’t really perfectly understand how the interests are calculated. Since the interest is calculated relative to the principal, if you make advance payments, you would surely save yourself some hard-earned money. However, before you make advance payments to expedite the total repayment of your loan, you should first study and take a cursory look into the stipulations incorporated in the terms and conditions of your mortgage loan. Some lenders readily penalize borrowers who make advance payments. Hence, you should first take a look at the terms and conditions of the loan before you make advance payment. Moreover, you should try to figure out how the interest will be calculated to get a holistic view of the amount that you are going to pay.

Flexible Mortgage, Mortgage Acceleration, and Offset Mortgage
In 1990, flexible mortgage first made its appearance in Australia. Although it did not immediately gain enough momentum and popularity in that country, it however became widely popular in the later part of the last decade of the last century. The idea likewise gained much popularity in the United States and in the United Kingdom. Other terms such as mortgage acceleration likewise gained popularity. This term refers to the process of speeding up the payment of the mortgage loan if in case the borrower happens to be in a position of having enough financial capability to pay faster the loan. The traditional terms and conditions for mortgage loans often penalize borrowers who make advance payments.

Likewise, there is the novel idea of offset mortgage which is popular both in UK and Australia. The good thing about offset mortgage is that you can greatly reduce the amount of interest that you are going to pay a lender because as you pay in advance, the outstanding net debt is reduced drastically, and since, in the case of offset mortgage, the interest is calculated against the net debt, the interest is greatly reduced along the way.