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At S&N REALESTATE we specialize in finding creative financing solutions to best suit your needs
Familiar with the terms : amortization, fixed rate, variable rate, ratios. principal? Here’s a quick summary in mortgage basics to help you make the right choice that will impact you in the short and long term.
TERM: Usually for five years or less standing mortgage in which the loan is not amortized over a fixed period but only interest is paid over the term of the loan. When the loan term ends (mortgage matures) the principal loan is up for renewal
AMORTIZATION PERIOD: Amortization refers to the process of paying off a debt (often from a loan or mortgage) over time through regular payments
FIXED RATE: A fixed-rate mortgage, is a fully amortizing mortgage loan where the interest rate on the note remains the same through the term of the loan, as opposed to variable loans where the interest rate may adjust.
VARIABLE RATE: Variable rate mortgages are attractive because they usually have a low interest rate for an initial period of a few years, and that initial rate is usually less than the rate on a fixed rate mortgage. This interest-rate difference can yield significant savings for borrowers at the beginning of the mortgage term. However, once the introductory period ends, the rate will move up or down as market interest rates change.
CLOSED VS. OPEN MORTGAGE: Open and closed mortgages. Open mortgages allow you to prepay any amount of your mortgage at any time without a compensation charge. Closed mortgages have a prepayment limit, which means you are only permitted to pay 15% of the original principal balance of the mortgage per calendar year.
HIGH-RATIO OR CONVENTIONAL MORTGAGE: In addition, conventional mortgages do not often require mortgage insurance. High ratio mortgages must be insured by the Canada Mortgage and Housing Corporation (CMHC) or another company approved by the lender, such as Genworth Financial or Canada Guaranty
Find out how much you’re eligible to borrow before you start looking. You’ll know exactly how much you can afford, and you’ll be guaranteed the interest rate that’s available at the time of your pre-approval for 60-120 days. If rates go up, you won’t have to worry about paying more, and if they go down, you get the lower rate. It’s win-win, free and there’s never an obligation to go with that lender