Choices for Financing Your Holiday Home
25 February 2011
Once you have found the perfect Algarve property for sale, the next decision is how best to finance the purchase. There are many different ways to purchase an Algarve property for sale, but unless you are a multi-millionaire, the chances are slim that you will be purchasing the whole property upfront in cash. Like most people, you will be financing your Algarve property for sale via a mortgage. However, there are many different types of mortgages, so how do you know which one to choose?
Here are a few of the different types of mortgages available:
- Interest Only Mortgage - With this type of mortgage, you only pay a monthly payment that covers the interest, and don't pay back the original loan until the end of the mortgage term.
- Repayment Mortgage - In this scheme, you are able to pay off part of the original loan as well as the interest every month. The disadvantage is that you will be paying higher monthly sums, however by the end of the mortgage term you will own the property. Many holiday home owners using this type of mortgage rent out their property, and use the rental income to cover the mortgage payments.
- Equity Release Mortgages - These arrangements allow you to secure payments against your existing property in order to pay for your new holiday home. You will benefit from keeping all of your payments together and in one currency, but if you can't keep up with the payments then both of your homes are at risk!
Which mortgage you should choose depends on your plans for the property, how much you have to invest, and your plans for the future. To determine which mortgage style would be the best choice to finance your Algarve property for sale, speak with a financial advisor.
Looking for the ideal Algarve property for sale? The Select Resorts website features beautiful homes in scenic locations with fantastic views.