What type of mortgage is best for you?
- Fixed rate mortgages: Your interest rate is locked in for a specific period called a term. Your payments stay the same for the mortgage's term so you will not pay more if interest rates increase over time.
- Variable rate mortgages: Tate of interest you pay may change if rate go up or down.
- Conventional mortgages: Require a down payment of more than 20% of the propety's value. You are not required to get mortgage default insurance with a conventional mortgage.
- Closed mortgages: The mortgage cannot be paid off early without paying a prepayment charge.
- Open mortgages: A mortgage that can be paid off at any time during the term, without having to pay a charge. The interest rate for an open mortgage may be higher than for a closed mortgage with the same term.
What mortgages features are best for you?
- Portable mortgages: If you sell your existing home, you can transfer your mortgage to your new home while keeping your existing interest rate. You may be able to avoid prepayment charges by porting your mortgage.
- Prepayment privileges: You can make lump sum prepayments without having to pay a charge. This can help you pay off your mortgage quicker and save on interest charges.
How often can you make your payments?
- By switching from monthly payments to accelerated weekly or biweekly payments, you can pay off your mortgage faster. Explore you options for mortgage payments and see how much interest you could save.
A mortgage is a loan, generally used to buy a property. How much you pay depends on how much you borrow (the principal), the loan's interest rate, an how long you take to pay it back (the amortization period).
Do not be afraid to negotiate interest rates and mortgage terms with different lenders. They are offering you a product and talking to more than one lender helps you make an informed decision.
Courtesy of "Home Buyers Road Map" - Financial Consumer Agency of Canada
