Refers to how long the bank has agreed to lend you the money – typically from six months to five years. At the end of the term, you usually renegotiate a new term.
The length of time it will take to pay off the whole mortgage, often as long as 25 years. The longer your amortization, the lower your monthly payments, but the more you pay in interest over time.
Interest is the cost of borrowing money, and the interest rate tells you exactly how much. Using this mortgage calculator, check the difference between borrowing $100 000 at 4%, 5% and at 6% at the same amortization. Surprising, no?
That interest rate not only affects how much you pay, it also affects how much you can borrow. So we will keep searching for the best rate available to you!
How big a down payment?
You want as small a mortgage as possible, which means making the biggest down payment possible. Just remember to set money aside for all the fees associated with buying a home (on average 1.7%). Not to mention moving, repairs, renovations, new furniture… think ahead.
The Home Buyers’ Plan Â– A little sweet relief
If you’re a first-time homebuyer with money in an RRSP, you can withdraw up to $25,000 without paying any income tax. If your spouse is also eligible, that’s $50,000. Ask your REALTOR® how to best take advantage of this plan.
Lock into an interest rate? For how long?
It’s a tough question. What if you ‘lock in’ for five years and the rate goes into a period of decline? That could mean you’re stuck paying more than you had to for a long time. But if rates were to steadily climb over the next five years, locking in for five years now would be a great move. Your REALTOR® may have a lot of good advice.
Mortgage Man – Dominion Lending Centres
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