The time has come to apply for your homeowner’s mortgage! With so many factors involved, now is when you want the help of a professional at your side. The first step is to assess your budget and consider the type of payments you can make.
When you look on the internet, there are lots of lenders with all sorts of plans and rates. It sometimes feels like you are investing in the stock market. While it’s not a stock, it is a significant investment. That’s why it’s important to be informed before you sign.
I can point out the information you need to reduce risks and help you fit a plan to your income and budget. The first thing you need to determine is what interest rate you will pay on your mortgage.
Bank rates, known as the prime rate, are set by the Bank of Canada. The prime rate can rise and fall as economic factors influence financial sectors. Mortgage lenders use that rate and add percentages to the money they loan you for your mortgage.
There are a lot of different interest rates available from various lenders, so it pays to shop around. As a Calgary mortgage broker, I have built relationships with lenders throughout the city. Using my contacts and my experience, I can help you secure the best mortgage product available to you.
Sometimes the banks have criteria that make it hard for you to secure a loan. Don’t be discouraged. There are lots of lenders that have fewer requirements and will extend a homeowner’s mortgage.
Part of my job is to monitor interest rates and identify which lenders have criteria that can help my clients. I can relay that knowledge to you so that you can make an informed decision about your mortgage.
Once you have found your lender, the next step is to choose the mortgage terms. A common question at this stage is, should I go for a fixed or variable rate mortgage? Both options are available, and both have pros and cons.
A fixed mortgage might help you budget and feel more secure. The monthly payment is set, and you can budget accordingly. The downside is sometimes the lender limits the lump sum amounts you can pay per year and attach penalty fees for prepayment.
A variable rate appeals to some people because of its flexibility. Because rates can vary from day to day variable rates are often set at lower percentages. It may save you some money, but when interest rates are climbing, you could pay more, too. Variable terms usually allow you to make lump-sum payments, or pay off the mortgage, without penalty fees. There are open and closed options for both types of mortgages, and amortization terms differ.