With dozens of competing banks in Jakarta to choose from, you could think that today's mortgage market is very confusing in Jakarta. It really is not though if you know the basic facts about financing a property purchase in Jakarta. The following questions and answers should assist you, if you are interested in buying a property in Jakarta and taking a mortgage from a local bank in Jakarta
How much can my mortgage be in Jakarta?
In general it depends on your monthly income and the cost of your new real estate property in Jakarta. Banks and financial institutions in Jakarta use certain guidelines to determine the mortgage amount that they will lend to most homebuyers. The main guidelines used are housing expenses and long term debt for the property in Jakarta. Local banks in Jakarta generally say that housing expenses (including mortgage payments, property insurance, income taxes and special assessments) should not exceed 24 % to 32% of your monthly income.
- Conventional Mortgage Loans in Jakarta
Housing Expenses in Jakarta should be around 24% - 32% of your monthly income
Housing Expenses + your Long-Term Debt in Jakarta = 33% - 39% of your monthly income
Banks in Jakarta usually define long-term debt as monthly expenses extending more than 12-24 month into the future. These expenses should not exceed 33 % to 39% of the homeowner's gross monthly income in Jakarta.
What Types of Mortgage Loans are available in Jakarta
Although you may see many different types of mortgages advertised in Jakarta, they all belong to just two type of mortgages: mortgages that carry a fixed interest rate, and mortgages that change interest rate during the course of the mortgage-loan on a periodic schedule mutually agreed by you and your your bank in Jakarta.
Fixed Rate Mortgages in Jakarta
You may are familiar with a fixed-rate mortgage. The major advantage of a fixed rate mortgage is that you know exactly your housing cost for the lifetime of the mortgage loan in Jakarta. Some fixed-rate mortgages are as following:
- 30-year fixed-rate mortgages
- 15-year fixed-rate mortgages
- Bi-weekly mortgages
- Convertible mortgages
The 30-year fixed-rate mortgage with banks in Jakarta may still be the best mortgage for your circumstances. It offers the lowest monthly payments of fixed-rate loans in Jakarta, and your monthly payment schedule will never change. Some banks in Jakarta offer 10, 25, 20year term mortgages as well. But please remember, the longer the term of the mortgage loan, the more total interest you will pay over the years to the banks in Jakarta.
The 15-year fixed-rate mortgage allows homeowners to own their homes free and clear in half the time and for less than half the total interest costs of the traditional 30-year loan. The loan's term is shortened by the 10 % to 15 % higher monthly payments. Some homebuyers in Jakarta prefer this mortgage because it allows them to own their home before their children start college. Others prefer it because they will own their home before retirement.
The major disadvantages of the 15-year fixed-rate mortgage in Jakarta are the higher monthly payments. But if saving on total interest costs and cutting the time before you fully own the Jakarta property, the 15-year fixed-rate mortgage is a good option.
Convertible Adjustable Rate Mortgages (ARMs) in Jakarta are another new loan product in the Singapore real-estate market. It worked like any other ARM, but it offers homeowners a distinct advantage as it allows them to turn their ARM into a fixed-rate mortgage after a set period (usually during the second through fifth years of the loan).
Adjustable Rate Mortgages in Jakarta
Adjustable Rate Mortgages (ARMs) have become on of the most popular and effective tools for helping some prospective homebuyers in Jakarta to achieve their dream of homeownership. Developed during a time of high interest rates that kept many people in Jakarta out of the housing market, the ARM offers lower initial rates by sharing the future risk of higher rates between borrower and your bank in Jakarta.
ARMs can be an excellent choice of financing under certain conditions, such as rising income expectations, high interest rates, and short-term homeownership. But because payments and interest rates can increase in Jakarta, either steadily or irregularly, homebuyers in Jakarta considering this kind of mortgage need to have the income to keep up with all possible rate or payment changes. Each ARM has four basic components:
- Initial interest rate, which is typically one to three percentage points lower than that of most fixed-rate mortgages in Jakarta. Lower interest rates also make ARMs somehow easier to qualify for in Jakarta. The initial interest rate is tied to certain economic indicators of the real-estate market in Jakarta, that dictate in part what the monthly payments will be.
- Adjustment interval, at the time between changes in the interest rate and how much the monthly payment will be.
- Index, against which banks in Jakarta measure the difference between what they are making on their investment in Jakarta's mortgage market and what they could possible earn by making other types of investments in Jakarta.
- Margin, or the additional amount the bank in Jakarta adds to the index to calculate the adjusted interest rate on an ARM. The margin is usually between 1.4% to 2.7%.
Info Guide for expats buying a property in Jakarta
In addition to the four basic components, an ARM in Jakarta usually contains certain consumer safeguards such as interest rate caps, which limits the amount that the interest rate applied to the payments may move. This prevents the amount of interest the consumer pays from rising higher than perhaps the homeowner can afford. For instance, a typical ARM would have a two percentage point cap over the life of the loan. That means that a mortgage-loan with a bank in Jakarta that has an initial interest rate of 7.75 % would be able to go no higher than 11.75 % over the lifetime of the mortgage, and it would be able to move no more than two percentage points per year.
Another safeguard found on some ARMs are monthly payment caps that limit the amount homeowners in Jakarta need to increase their payments at adjustment time. Monthly payment caps can, however, sometimes prevent the monthly payments from increasing enough to keep up with the rise in the interest rate, causing negative amortization-resulting in higher on more payments for the homeowner later on.
Other options you should ask the bank in Jakarta when shopping for an ARM are:
- Assumability, or whether you may transfer the mortgage to a new homebuyer in Jakarta, usually with the same terms if the new homebuyer qualifies by the local bank in Jakarta for the mortgage loan. ARMs in Jakarta are most time assumable.
- Convertibility allows the borrower in Jakarta to change an ARM to a fixed-rate mortgage, usually at the end of some predetermined period, locking in a lower interest rate offered by banks in Jakarta.
How do you shop most effectively for a mortgage in Jakarta?
First, you talk with your real estate agent or broker in Jakarta as real-estate professionals in Jakarta are normally in the best position to know about property financing opportunities in Jakarta's marketplace. Banks in Jakarta regularly contact property agents to alert them to new mortgage packages and real-estate agents in Jakarta are highly motivated to obtain financing for their buyers. Without a suitable loan, the sale of a proeprty in Jakarta can not proceed, and real-estate agents in Jakarta wo not get their sales commission on the house.
Second, look for rate surveys published by local newspaper in Jakarta. Many newspapers now include brief tables on interest rates and mortgage availability in the real-estate or business section. They can help guide you to sources you have not thought about.
Third, look in the Jakarta Yellow Pages under "Mortgages," and inquire for quotes by telephone. Call five to 10 different banks in Jakarta for rates and terms on fixed and adjustable loans.
No comments:
Post a Comment