Q&A
Jinxi Finance has always been committed to helping every client realize the dream of buying a property overseas. Our experts have a deep understanding of the mortgage industry and provide professional solutions based on your actual financial situation.
What is the difference between a fixed rate home mortgage and a floating rate home mortgage?
Fixed-rate home mortgage loan: It means that the loan interest rate will not change during the contract period of the home mortgage loan. Therefore, lenders do not need to consider changes in market interest rates during this period. The loan interest rate and the amount of each contribution will not change during the contract period. With each instalment, the principal amount of the loan will decrease accordingly, so the amount used to pay interest in each instalment amount will decrease accordingly, and the amount used to pay the principal amount will increase accordingly. Since the loan interest rate does not change during the contract period, the lender can determine the exact amount of principal and interest paid during the contract period in advance.
Floating rate home mortgage loan: It means that during the mortgage contract period, the loan interest rate will fluctuate according to the benchmark interest rate announced by the central bank. Because the amount of each instalment is constant, the amount of principal paid in each instalment will increase when the loan interest rate decreases and the amount of interest paid in each instalment will increase when the loan interest rate rises. The lender cannot know in advance the exact amount of principal and interest paid during the contract period.
What is the difference between a closed home mortgage and an open home mortgage?
Closed Home Mortgage: Includes a limit on the amount that can be repaid each year in advance. If the lender pays off the loan before the end of the contract, or if the prepayment exceeds the maximum amount stipulated in the contract, an additional prepayment fee is required.
Open Mortgage Loans: The lender can pay off the loan in part or in full at any time without incurring additional costs. Due to the flexibility of open housing mortgage loans in prepayment, generally speaking, the interest rate of open housing mortgage loans will be higher than that of closed housing mortgage loans.
Fixed rate home mortgage:
If the prepayment amount exceeds the limit stipulated in the loan contract (please refer to your latest loan contract), the penalty for prepayment will be paid according to the higher value in the calculation result of the following two methods:-the advance you want to pay Three-month interest expense on the repayment amount or-interest rate difference (IRD). The interest difference is equal to the difference between your annual interest rate and the mortgage interest rate closest to the remaining loan amount, minus any interest rate discounts you enjoy, multiply your prepayment amount, and then multiply by the remaining time of your loan term.
Floating rate home mortgage loan:
If the prepayment amount exceeds the limit stipulated in the loan contract (please refer to your latest loan contract), the penalty for prepayment is the three-month interest payment of the prepayment amount you want to pay.
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