Understanding your mortgage options
Whether you're applying for your first mortgage, or simply renewing, it is important to understand how you can customize your mortgage to fit your needs.
When applying for a mortgage, the first feature that normally comes to mind is the mortgage rate. Although a low rate is important, there are many other factors to consider that can offer flexibility and help you pay your mortgage off faster.
A variable rate mortgage can potentially save thousands of dollars of interest over the long term. A variable rate is set with the prime rate of the mortgage lender, and fluctuates according to market conditions. Many will choose a fixed rate for the comfort of knowing their monthly payments will always be the same, but it is possible to make fixed payments on a variable rate mortgage. If the interest rate increases, a larger portion of the monthly payment goes towards interest and vice versa. Using the fixed payment option gives the peace of mind of steady payments and the benefit of the lowest possible interest rate.
An increasing number of homeowners are making extra payments to their mortgages to reduce their debt faster. Each mortgage will come with different repayment terms, and many lenders limit extra payments to 20% of the balance each year. Paying more than the maximum can come with a penalty, so it is important to note the specific terms before signing on the dotted line.
The best way to ensure you are receiving the lowest rate possible with the most favourable terms is to consult a professional. An Ottawa Mortgage Broker will negotiate with lenders on your behalf to find not only the lowest mortgage rate possible, but the terms that best suit your financial situation.