Article Title: Choosing the Right Mortgage for YOU
Author Name: Craig Lock
Category (key words): Mortgages, Financial Success, Personal Finance, Money, Money Management, Financial Independance

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(Personal growth, self help, writing, internet marketing, spiritual, 'spiritual writings' (how 'airey-fairey'), words of inspiration and money management, how boring now, craig)

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"We share what we know, so that you and your money may grow."


Author's Note:
This short extract is a chapter in Craig Lock's booklet 'MASTER YOUR MORTGAGE*... OR IT WILL MASTER YOU', that he wrote for some financial institutions "many many moons" ago.
Those were the "heady" days when he had a "proper job in the corporate world", instead of being an "arty-farty writer type"!
* (or housing loan or bond, as it is termed in South Africa).
Which is the best type of home loan for you?
Always Remember,

You, the customer are in control. You, with advice from the financial institution can decide how you want your bond structured. There are usually a variety of options available to you. Which one is the best for you depends on your ability to service the loan and whether you wish to pay it off quickly and save interest costs, or spread repayments over a longer period and so take advantage of smaller monthly or fortnightly repayments.

Put in a nutshell, the features of a shorter term loan are larger regular repayments and reduced total cost, as opposed to a longer term bond, which has smaller regular payments and a larger total cost over the term.


Some of the common available loans are:

1. Reducing loan:
Here you pay off a regular fixed amount of the principal loan, plus interest right from the start. As a result, the principal reduces faster and the interest payments get smaller. This means that the total amount you owe decreases with every payment. Your interest payment decreases too; so that as time goes by, your repayments get smaller and smaller, which makes it very easy to service.

This is the option for you, if you can afford higher repayments and want reduced overall costs. If you are fortunate enough to be in this position, this is the option I would recommend.

2. Standard or "floating" bond:
This means you pay the same amount every month or fortnight, calculated to pay off the loan, plus interest over a set period of time. Initially you are paying off interest plus a small amount of principal. Your repayments are smaller at the outset than a reducing loan; so you can afford to borrow more. Fixed payments mean budgeting is easier; however at the expiry of the term, you will have paid more for the use of your money. The interest rate may go up or down, depending on market conditions. As already mentioned, you may be able to choose a fixed interest rate for the first 12 months. Refer diagram:

3. Flexible bonds: These are very useful. They are a unique account being a bond, overdraft, savings account and cheque facility all wrapped in one. Options one and two can usually also be flexible bonds.

By consolidating their financial accounts into one facility, the customer gets direct access to a credit line, which offers up to about 75 of the market value of their home.
You can:
* increase, decrease or sometimes suspend monthly repayments to suit needs and your changing circumstances.
* make lump sum payments and re-borrow at a later date, or extend the repayment term without penalty.
* repay the total loan at any time without penalty.

Flexible bonds allow you to adjust your lending to suit changes in your personal life. You can also use the flexibility to repay more expensive debt.

4. Interest only bond:
This can be suitable for those people on very tight budgets; because it offers the minimum monthly repayments. At first you pay interest only on the amount you have borrowed - so you are not paying off capital. After a period of time, you start paying the loan (principal) itself, as well as the interest. Your initial payments start off much lower than the other options; but in the end you pay far more for the use of the money that you have borrowed. I DO NOT recommend this option, which is not very common; although it can help people on very tight budgets. See diagram:

5. Reverse annuity bonds: These are popular overseas and are designed for older people, who are "asset-rich but cash-poor". The financial institution has the security and in effect commutes their annuity or pension for a lump sum.



Most people are committed to the hilt, when they first take out a bond; but as time goes by, changing personal circumstances ensure that they can afford a higher level of repayments. It is absolutely essential that your bond is FLEXIBLE (see 4). My recommendations are options one and two, as long as they incorporate the flexibility. So ask the lending institution, whether their loans are adaptable.

If your payments are set too low, you might find out that you owe more than the original bond. With my first home "naive vague Craig" was very surprised after a year or so, when I got a statement from the bank. My bond had increased; because I was not paying off any principal. "Dumbo!"

Manage your mortgage and you will manage your financial affairs*...
* no others, please

and consequently your life

Craig Lock ("Information and Inspiration Distributer, Incorrigible Encourager and People-builder")


Don't worry about the world ending today...
it's already tomorrow in "little" scenic and tranquil New Zealand

Author's Bio: 

About the author:
Craig has been involved in the personal finance field for many years before becoming a writer (at least trying). This extract is from Craig's ‘The Mad Money Book’ - a simple guide for every-person in understanding and making the best use of your money. Written in a light and humorous style. Craig believes in sharing information and insights to try and make some difference in this world: to help and especially encourage people along life's magical journey ... and that brings him the greatest joy.

‘The Mad Money Book - a simple guide for every person in understanding and making the best use of your money. Written in a light and humorous style.
This ebook is available at
The various books that Craig "felt inspired to write" are available at : +

Craig's blog (with extracts from his various writings: articles, books and new manuscripts) is at

“The world’s smallest and most exclusive bookstore”
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