Not all mortgages are one size fits all. Knowing which mortgage to apply for, depends on your homeowning goals. Make sure you understand the options and features, and always talk to a Mortgage Specialist. This will help you choose a mortgage that best suits your needs. This includes your:
⦁ Mortgage principal amount, the amount of money you borrow when you take out a loan on your home.
⦁ Amortization, the length of time it take to pay off a mortgage in full.
⦁ Payment frequency, with a monthly mortgage payment, you pay once a month every month. With a semi-monthly mortgage you pay twice a month.
Open or Closed Mortgages - An open mortgage offers maximum flexibility. Home buyers can prepay as much of the mortgage as they want without penalty. Fully open mortgages let borrowers pay additional amounts at any time during the life of the mortgage in addition to their regular payments. Fully opened mortgages are harder to find.
A closed mortgage signifies that you can't pay that mortgage off in full without a penalty being charged but you are still able to pay extra on the mortgage (amount is determined by the lender and represents a percentage of the original mortgage amount). Often you are even able to increase your payment on top of adding the lump sum annually. Closed mortgages generally have lower interest rates than open mortgages.
Convertible Mortgages - A convertible mortgage allows you to switch from open to closed mortgage. The interest rates are typically lower for this option than they are for open mortgages.
Variable and Capped Rate Mortgages - With a Variable Rate Mortgage, your payments will be consistent throughout the term of the mortgage, the interest rate will fluctuate over the course of the term based on market conditions.
A Capped Rate Mortgage sets the maximum and minimum rates a borrower will pay regardless of fluctuations. The lender offers a guarantee that you will never pay above the capped interest rate.
Reverse Mortgages - Homeowners aged 55 years and older can convert their home equity into either a lump sum payment or monthly cash payment(s), generally for living expenses. The older the homeowner is, the more money they’ll be able to borrow.
"It’s always best to ask a professional for which mortgage is best suited for you" said Mortgage Agent, Shelley Russell of Windsor, ON.
Contact a Mortgage Specialist from our list of Preferred Financial Suppliers, to get pre-approved and to answer all of your mortgage questions!
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