Know Your Mortgage Options
Whether you're purchasing a home for the first time, taking out equity from your home for investment or pleasure, or your current mortgage is simply up for renewal, it's important that you are making an educated buying decision.
If you are unsure where to start, contact us and get fast, simple, and practical advice.
What's In A Mortgage?
Mortgage products and lenders vary quite significantly, and any one mortgage can be packaged differently to suit the needs of a specific customer. Every mortgage will have the following basic components:
Mortgage Interest Rate
It is always best to try to get the lowest mortgage rate possible. The mortgage rate is the interest the mortgage lender will charge you for borrowing the mortgage amount for a given number of years.
Another aspect of a mortgage rate is if it is a fixed rate or a variable rate. This depends on your risk tolerance and your short and long term goals.
We can negotiate the best mortgage rate on your behalf and also advise you on whether a fixed or variable rate is best suited for your needs.
Mortgage Life Vs Term
The mortgage life is the amount of time the borrowed amount is calculated to be paid back, which gives you your monthly mortgage payment. Typical mortgage life ranges from 20-30 years. (Just recently, the mortgage rules have been set to eliminate the 35 year mortgage.) The shorter the mortgage life the less interest you pay overall.
The mortgage term is the amount of time lenders loan you the money. This is a contract between you and the lender as to how long you will continue payment a given monthly mortgage payment. Mortgage terms can vary from 0 to 5 years. At the end of each term you can renew, renegotiate, or terminate the contract with the lender.
We can help you determine whether a short or long mortgage term is better for your particular situation.
Payment Frequency and Conditions
Payment frequency is a flexible and agreed upon between you and the lender. It is how often you wish to make your mortgage payment, for example: bi-weekly, semi-monthly, or monthly. The higher the payment frequency, the quicker you pay off your mortgage, thus reducing interest costs.
Mortgage contracts will specify if it is open or closed. A closed mortgage locks you in for that mortgage term or a penalty will be charged for paying off the mortgage earlier than the set term. Or, conditions will be set on how much extra payments you can make on the principal borrowed amount.
For open mortgages you can repay the balance without penalty. Open mortgages typically will have a higher interest rate.
We can help you decide between an open and closed mortgage, as well as negotiate the best mortgage rates.