April 27, 2008


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80 20 Mortgages are home loans that provide 80 % of the market price of the house you wish to buy. The exact amount provided by the finance company is dependent on the appraisal (valuation) of the house. If the house you wish to buy is worth 100,000 dollars you will be given 80,000 dollars. The balance will be covered by the borrower, that is you I’m afraid.80 20 Mortgages are good for the buyer and the lender as long as the borrower has some cash of his own to invest in the purchase of the house. It is good for the lender or finance company because it is a low risk loan. The house has an instant equity (from the bank’s perspective) of 20%. This means the bank’s or finance company’s investment is rather safe if the borrower cannot or will not cover the monthly payments.80 20 Mortgages don’t seem to be the loan of choice for first time home buyers. They are good for buyers with some savings of their own which can be used to pay the 20% of the price of the house. Buyers that choose this loan will also need funds to pay for the purchasing costs, i.e. appraisal fees, mortgage setup fees, etc… If you have the circumstances 80 20 mortgages can save you money and headaches throughout the tenure of the home loan.



Home Loans http://www.talkinghomeloans.com

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April 2008

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