Types of Mortgages
Fixed
Rate Mortgage - Scenario
No. 1
Jennifer and Sheldon are about to embark on the biggest
purchase of their lives: their first home. They’ve
scrimped together a modest down payment and while they
know their monthly budget will be tight, they’re
about to start shopping for a mortgage. They want to
get the financial part over with quickly: there are fun
things like new paint colours to think about.
Like most Canadians and the majority
of first-home buyers, Jennifer and Sheldon have a low
risk tolerance and will be better suited to the certainty
of a fixed rate mortgage.
Ask yourself these questions:
- Do you like knowing what your
mortgage payments are going to be each month?
- Do you want to avoid the need
to consistently watch rates?
If you answered "yes" to
one or both of these questions, a conservative Fixed
Rate Mortgage may be a wise choice for you.
Variable Rate Mortgage - Scenario
No. 2
Friends Roger and Daniel think
this is the time to join forces and buy that investment
property they’ve talked
about over drinks for the last few years. With rental vacancies
at an all time low, they don’t think the place will
sit empty long; if it does, Roger’s got some bonus
money banked to cover them. And Daniel knows he’s
got an influx of cash coming in from his business in a
couple of months. They know the risks but this deal is
all about the long-term rewards.
People with a flexible budget and
an interest in watching market conditions like Roger
and Daniel may be able to take advantage of a faster
repayment plan through a Variable Rate Mortgage.
Ask yourself these questions:
- Are you interested
in watching market conditions?
- Can you handle sudden rate increases
that could also significantly increase your payment?
- Are you willing to accept some
risk in exchange for an opportunity to pay off your
mortgage faster?
If you answered "yes" to
these questions, a Variable Rate Mortgage might best
suit your needs.
Capped
Rate Variable Mortgage
A Capped Rate Variable Mortgage is the "best
of both worlds" for people who would
like the flexibility of a Variable Rate Mortgage
with the consistency and predictability of
a Fixed Rate Mortgage. With a Capped Rate
Variable Mortgage, the lender gives a written
guarantee that the interest rate you pay
will never be higher than a pre-determined "capped" rate.
This protects you in the event that interest
rates rise; however, you’ll also get
the benefits of a Variable Rate Mortgage.
Interest
Only Mortgage
An Interest Only mortgage might be a good
fit for people whose income is mostly in
the form of infrequent commissions or bonuses
or for someone who expects to earn more in
a few years. With an interest-only mortgage
loan, you pay only the interest on the mortgage
in monthly payments for a fixed term, making
monthly payment significantly more affordable.
Lines
of Credit
Lines of Credit may be an option if you like
the idea of paying your mortgage at your
own pace. A Line of Credit lets you determine
your own monthly payments -- as low as interest
only, or as much as you want. A Line of Credit
allows you to use the equity in your home
to borrow money. As your mortgage balance
decreases, your available credit increases.
Use this extra cash to achieve your dreams:
do renovations, travel or assist family.
Click here to contact us today...
