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manufactured home loan |
How a home loan works A home loan is made up of principal and interest. Principal is the amount you borrow. Interest is what you pay to borrow the money. At the start of the loan, your repayments largely consist of interest, with a small amount going towards the principal. As you reduce the principal, your interest charges fall until eventually the loan is paid off. What's in it for the lender Home loan lending is the core activity of many banks and financial institutions. They make their money from:
These charges reflect the cost of money as set by the Reserve Bank, the risk associated with the home loan, the cost of administering it and the need for all businesses to make a reasonable profit. |
