So you’re wondering.. “How Can I Get A Mortgage Loan” in Canada? Well, most of us do not invest enough time nor lend the effort into properly researching and thus securing the best rate for a mortgage, whether you’re a first time home buyer or refinancing.
After all, buying a house is the one most single important and expensive purchase that you will be making in your lifetime!
You will spend a lot of time researching and finding that perfect house. Amenities which may include: Is the new home situated in the suburbs or downtown? Is it close to schools? Is It close to shopping or freeways? Does it have a large kitchen or that big backyard complete with a swimming pool and a big cedar deck for Sunday barbeque’s?
But yet, when it comes to finding the best deal for a mortgage loan, you will most often just take what is offered to you by the lending institutions, rather than securing the best possible mortgage for your particular situation.
So when you take into consideration that the average Canadian homeowner will pay out more in interest payments over the lifetime of their mortgage loan than what the home originally cost, it is vital to do your due diligence and research on securing the best mortgage deal before you shop for a house. This step could save you thousands and thousands of dollars in interest payments over the 20, 25 or 30 year term of the mortgage loan.
Fortunately researching for the best Canadian mortgage loan, as well as repayment options that are currently available can be found on the internet. Thus making this grueling process a lot more efficient and relaxing for you.
All Mortgages Are Not The Same
Mortgages loans in Canada come in several different forms. You as a potential home owner need to be aware of them, in order for you to determine which type of mortgage is the best for you to suit your particular circumstances.
Mortgages Will Fall Into One Of The Following Categories
Mortgage lenders will have different variations of these basic categories and may present them to you differently, but if you have done your homework, you will be able to determine and choose the right package tailored to you based on your age, income, credit situation etc.
So What Is A Fixed Rate Mortgage
Fixed rate mortgages are loans with a set interest rate that remains the same for the entire term of the mortgage. Approximately 75% of mortgages in Canada are this type. This is because A “fixed rate mortgage” loan often offers the best deal/rates for first time home buyers.
What Are Adjustable Rate Mortgages and Variable Rate Mortgages
An Adjustable rate mortgage is a mortgage loan where the interest rate adjusts back and forth or mirrors with fluctuation in rates on Treasury Bills or Certificates of Deposits. In Canada, these rates will vary according to the weekly “Bank of Canada” rates.
Adjustable rate mortgages or variable rate mortgages can be an attractive option as the rates are often lower than fixed rate mortgages. They are an excellent choice for borrowers who are aware of rate fluctuations and are prepared to ‘lock in’ their mortgage loan before interest rates start rising. If you are aware or constantly monitoring the money markets, this type of mortgage may be the best deal you.
What Is A Balloon Mortgage
A balloon mortgage is when the monthly payments are not intended to repay the entire loan. Thus the final payment is a large lump sum payment of the remaining principal. Balloon mortgages are most commonly only partially amortized and require a lump sum repayment when it matures.
Balloon mortgages are popular in the US for homeowners who are not planning on staying in their newly purchased home for more than 5 years. This is because the balloon mortgage interest rate is lower then a “fixed rate mortgage”. But if you decide to remain in the home for longer than the 5 to 7 year term, you would then have to secure a new mortgage to pay off the existing balloon mortgage.
What Is A High Ratio Mortgage
“High Ratio Mortgages” in Canada are guaranteed and funded through the (CMHC)Canada Mortgage And Housing Corporation.
Now that you are aware of the different types of mortgages available to you, and might suit you the best, you will then need to consider the two repayment methods available to you:
1.) Interest Only
An “interest only” payment method can be combined with any type of mortgage that you choose. The interest only payment periods will almost never run for the entire life term of the mortgage loan, so be prepared to have your payments rise to include both the principal and interest once the “interest only” period concludes.
2.) Principal and Interest
Your monthly repayments will be divided into: an interest payment as well as a principal repayment. At the beginning of the mortgage loan period, most of the monthly payments are allocated to interest, but over time, the balance will reverse, allowing you to pay off more of the principal borrowed.
Use Lenders Direct In Canada And Get The Mortgage Lenders To Compete With Each Other
There are a lot of mortgage lenders offering a variety of mortgage loan options that can be overwhelming to decide which lender best suits you and your circumstances.
By using Lenders Direct, you can compare for free, no obligation mortgage quotes from Canada’s top lenders.Make them compete against each other.
Get the best quote on a mortgage Today!