Choose the right mortgage and start a family with peace of mind

        Many people need to use loans to fulfill their dreams when purchasing a house. However, there are many types of mortgage products, and different solutions are applicable to different ethnic groups. This issue of the "Finance Column" will introduce common mortgage products and provide relevant suggestions to help you quickly select suitable mortgage solutions.

        What is an index based mortgage?

                At present, most of the housing loans on the market are "index based", and the interest rate is adjusted according to the fluctuations of the market interest rate index. It is usually calculated based on the "fixed reserve index" announced by various banks. The frequency of adjustment is divided into monthly index and quarterly index, and changes are made based on the adjustment date announced by the banks each month.

        If you choose "floating interest calculation", the loan interest rate will fluctuate with changes in the market environment, and as the interest rate increases, the monthly payment will correspondingly increase. Otherwise, it will decrease. If the market environment does not raise interest rates, the monthly loan payment will remain unchanged.

        If you choose 'fixed interest rate', the interest rate will not be affected by changes in market environment during the loan period. However, due to the longer loan term of housing loans, this method has become increasingly rare. Generally, banks only provide a "fixed interest period" of one to two years, and from the third year onwards, they adopt a "floating interest period".

        What are the types of mortgage loans?

        1、 Evenly distributed housing loan

        The evenly distributed housing loan is the mainstream of the housing loan market, usually used for home purchase loans or other banks to transfer loans. In other words, borrowers need a long-term and stable repayment method due to needs such as purchasing a house. The repayment methods are divided into two types: "equal sharing of principal and interest" and "equal sharing of principal and interest".

        1. Equalization of principal and interest: Generally, this method is adopted for housing loans. Without raising or lowering interest rates, the monthly repayment amount is fixed, including a combination of principal and interest, but the ratio of the two will change over time. In the early stages of repaying a loan, the monthly interest payments are higher and the principal is lower. As the loan principal gradually decreases, the monthly interest payments will also decrease, and the relative amount of principal repayment will increase, facilitating the borrower to repay on time and stably during the loan period.

        2. Equal sharing of principal: This method repays a fixed amount of principal on a monthly basis, with interest calculated separately based on the loan balance. In other words, the monthly repayment amount varies, but in the long run, interest payments are relatively small.

        In summary, each of the above two methods has its own advantages and disadvantages. The former is more convenient in fund management due to a fixed monthly repayment amount; The repayment amount of the latter is not fixed, but the interest paid is relatively small. It is recommended to choose a suitable solution based on needs.

        2、 Revolving housing loans

        Some banks may refer to "revolving housing loans" as "wealth management housing loans" for short. Unlike traditional housing loans, they provide a revolving fund limit that can be collected and repaid at any time, without any binding terms. Interest is calculated on a daily basis and only when used. If there is no movable loan amount, interest is not required to be paid. It is suitable for those who prefer flexible use of funds, such as those with investment in stocks, foreign currencies, and other financial needs Self employed individuals, SOHO ethnic groups, or those who require temporary reserve funds (such as paying for children's education and medical care).

        Due to the fact that mortgage interest rates are more cost-effective than credit rates, credit card revolving loans, stock financing, and guaranteed quality loans, and the amount is not limited by the revenue multiples of unsecured loans imposed by regulatory authorities, the amount of loans that can be applied for is relatively high. In addition, "revolving housing loans" only require monthly interest payments, so some customers will invest in products with higher returns to achieve higher profits. However, it is necessary to remind everyone that risk control and personal credit must still be taken into account. If the credit deteriorates when the loan term expires, the bank may withdraw the limit.

        3、 Interest offsetting mortgage

        This type of mortgage product belongs to a relatively special category, similar to the "evenly distributed mortgage", which requires monthly repayment of principal and interest, but the bank will offset the individual's deposit balance against the loan balance every day. For example, if you have a deposit of NTD 10 million and a mortgage of NTD 15 million, based on the discount ratio provided by the bank, assuming a 100% discount of the loan amount, the "interest offsetting mortgage" will calculate interest at NTD 5 million (NTD 15 million minus NTD 10 million), indicating that the lender only needs to pay interest on the remaining amount and does not need to pay interest on the entire loan amount, which can save a lot of interest burden and effectively reduce loan costs.

        Compared to "evenly distributed mortgage", "interest offset mortgage" usually has a slightly higher interest rate than traditional mortgage products. However, for people with large deposits, in addition to saving a lot of interest, they can also flexibly use their funds.

        4、 Second Ranking Housing Loan

        The term 'secondary mortgage' refers to borrowing a mortgage from another bank in addition to the original mortgage, usually used to supplement additional financial needs that cannot be covered by the original mortgage, such as house repairs, purchasing vehicles, or other personal expenses.

        Due to the second ranking mortgage rights of the new loan bank, the risk it bears is relatively high. Not only is the loan interest rate relatively high, but the review process is also stricter than the first ranking real estate loan, including: loan amount, interest rate, repayment term, customer conditions, etc., which are all restricted. It is suitable for customers with short-term capital needs or those whose credit limit cannot meet their capital needs.

        5、 Government preferential housing loans:

        The "Government Preferential Housing Loan" is a loan program provided by relevant government agencies to help specific customer groups achieve their dream of purchasing a house. For example, for first-time homebuyers or low-income families, they can refer to the "Residential Loan Interest Subsidy" of the Ministry of the Interior's Construction Department or the "Public Bank Youth Anxin Home Purchase Preferential Loan" of the Ministry of Finance. Due to the usual offer of lower interest rates, longer repayment terms, or other favorable conditions, if eligible, it is definitely a worthwhile option to consider.

        6、 Public education housing loan:

        Currently, it is established by the Executive Yuan and provides housing loan discounts for all employees of public education in Taiwan. From 2022 to 2024, the selected banks were Taiwan Bank and China Trust, with a loan interest rate of two-year Postal Savings+0.465% (currently 2.06%), which is not significantly different from the loan interest rate of general banks. Those who meet the qualifications should compare with three banks and choose banks with better years, credit limits, and interest rates.

        How to choose a mortgage plan?

        Before applying for a mortgage, it is recommended to first understand your financial situation and goals, evaluate income, savings, and expenses, determine the loan amount and repayment ability you can afford, and consider future financial goals, such as retirement, education expenses, or other important expenses. Additionally, consider the following factors to compare different mortgage products:

        1. Interest rate: "Balanced mortgage" usually has the lowest interest rate, while "revolving mortgage" may have a slightly higher interest rate of 0.5%. However, it is very practical for those who need to regularly allocate funds. "Offset mortgage" usually has an interest rate between the first two, which is suitable for customers who need to retain large demand deposits.

        2. Repayment term: A longer repayment term means a lower monthly repayment amount, while the repayment speed is relatively slow, resulting in an overall increase in interest expenses; A shorter repayment term results in a higher monthly repayment amount, but the overall interest expense is lower, which should be considered based on the individual's financial plan and repayment ability.

        3. Additional conditions: Different mortgage products may have additional conditions, such as whether there are requirements such as grace period, prepayment fees, application fees, and monthly debt ratio. Please carefully understand and consider whether the additional conditions meet the requirements.

        After reading the above introduction, have you gained a general understanding of the differences in various mortgage loans? Whether you have a home purchase, loan transfer, investment, financial needs, or just need a temporary reserve fund, you can use the "Far Eastern International Bank Housing Loan Application Service" online. A dedicated person will call you to assist in evaluating and selecting the most suitable loan plan for you.

        Inventory mortgage products and select the most suitable solution for oneself

        name

        explain

        Evenly distributed housing loan

        Suitable for those who need to buy a house or transfer loans, can provide lower interest rates, and are suitable for those who live in their own homes and hope to hold them for a long time

        Revolving housing loans

        Having the characteristics of borrowing and returning as needed, and flexible fund utilization, it may be an attractive choice for those who have investment and financial needs or self operated businesses that require large amounts of funds or financial reserve funds

        Interest offsetting mortgage

        Applicable to ethnic groups with large current deposits in their accounts

        Second Ranking Housing Loan

        Suitable for customers who have financial needs and the original mortgage bank is no longer able to increase loans, or those who do not want to transfer loans and pay the set fee, but need to ensure that they can bear the additional monthly payment.

        Government preferential housing loans

        Usually limited to first-time homebuyers, the government bears a portion of the interest. For long-term loans, the overall interest paid by applicants is relatively low. Those who meet the preferential conditions can consider

        Public education housing loan

        As long as you meet the qualifications of a civil servant, you can apply for a loan regardless of whether it is your first time buying a house. However, it is important to note that there are limit limits. If you wish to have a high limit, it is advisable to compare several banks

        Far Eastern International Bank housing loan application: https://iapp.feib.com.tw/iapp/jsp/houseLoan/apply/index.jsp?page=step2&channel=FEM

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