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Buyer
Take a look in the newspapers or the advertisements that you receive by mail, and most likely you will notice an ad of a mortgage loaner who, seemingly, is perfectly appropriate for you. Nevertheless, these loans cannot always exactly fit your needs, because your financial characteristics and your personal needs are unique – which is why the mortgage solution that you chose must perfectly fit you. There seems to be a whole range of mortgage options on the market and the loaners compete with each other when comes the time to give them a name. However, if you make abstraction of the entire mortgage hyperboles and the mortgage terminology, the options can be reduced to the following: Initial payment If you are going for a conventional mortgage rate, you must pay of your pocket a set up funds at least equal to 25% of the purchase price. On the other hand, the mortgage rate of high ratio offers you to reduce that payment down to only 5% (therefore you must then subscribe to mortgage insurance trough the Canada Mortgage and Housing Corporation or by Genworth Financial Canada). Remember however that the more your setup funds are reduced, the higher your mortgage payments will be – so take the time to think before going for this option. Damping The damping period is the number of years that you will need to refund completely your mortgage loan. Usually, the period is of 25 years. However by making higher monthly payments on a shortened period, you will considerably save on your loan cost. Duration The duration of a mortgage loan is the number of months for which you are granted a loan of the same interest rate and according to the same methods. When the interest rates are low, it is maybe more advantageous to go for a more extended duration. When the rates are high or are falling, it is preferable to choose a shorter duration – six months or a year – and to reevaluate your options thereafter. Open or closed Loan An open mortgage loan offers you the option to refund your debt as quickly as desired, and that, at any time and without any penalty. A closed mortgage loan cannot be refunded completely with a single payment, nor even can it be renegotiated or refinanced during its period without engendering a penalty. On the other hand, the interest loan of open mortgage loans is generally higher than closed ones. Fixed or variable rate The interest rate of a fixed rate mortgage loan remains the same for the whole loan duration, so your monthly payments will not reserve you any surprise. The payments for variable rate mortgage loans fluctuate every month, since the market’s rates are in constant change. The fixed rate mortgage loans generally show higher rates than those of variable rates. Choosing the right mortgage loan is not an easy decision to take. Your mortgage adviser can help you analyze your financial situation and model a mortgage loan that’s perfectly adapted to your objectives. Published by Jackes Brouillard Monday May 15th, 2006 at 12:41 PM |
Nowadays, everyone is talking about mortgage loans. While interest rates are still relatively low and the Canadian housing market remains very dynamic (even though it seems to be quickly losing power in the US). Loaners know well that many people think about buying their first house or yet moving.