Four one reason or another, you may need to have a mortgage for your home. There are many different types of mortgages for home loans. The two that you may be considering could be standard and simple interest mortgages. With a simple interest loan, there are many advantages that you may want to consider. Here are some things that you will want to know before applying for a simple interest loan:
1. Reduce Your Interest By Paying Payments Before The Due Date
One big benefit of a simple interest loan is that there is a way you can pay less interest. This is simple to do, by just paying the loan payments a few days earlier. This is because with a simple interest loan the rate is calculated daily, so paying it early can help to lower your payments. To do this, set a day to make your payment. If you can make your monthly payments as much as 10 days early, you will be able to save yourself some money. If you make payments within the grace period or late, you can expect to pay more for your loan because you will be paying more interest.
2. Interest Is Calculated Daily For A Simple Interest Loan
One of the benefits of simple interest loan can also be its disadvantage. With a simple interest loan, the interest rate will be calculated daily. This means that the loan is divided by the days in the year to determine your interest. If you make payments on time or late, this can actually cause you to pay more interest. This is why you want to make sure you are able to pay your loan early with this type of loan. If you cannot manage to pay your loan early, you may want to consider a standard type mortgage where your interest will be calculated monthly, rather than daily.
3. Making Early Payments Can Shorten The Days Of A Simple Interest Loan
Making early payments can be another way that you can manage to pay less with a simple interest loan. Pay the payments at least before the grace period to pay less. This will not only help you to pay less, but it can also shorten the length of your loan. By making regular early payments, you may be able to reduce the length of your loan by a year or close to it. This means that you will have fewer payments, which is how you will save on interest since it is calculated daily.
These are some of the things that you will want to know before getting a simple interest loan. If you need help finding the right financing, contact a simple interest home loan service to get the money you need for your home.