When buying a home, there’s a good chance that you won’t be paying for it in full right off the bat. Instead, you’re going to need a mortgage.
In many ways, choosing the right mortgage for you is just as important as choosing the right home. Whether it’s your first time buying a home or you are heading back to the market and looking to brush up on your financing options, it’s worth taking a closer look at the topic. Let’s jump in.
Mortgage Basics
Let’s start from the top. What exactly is a mortgage? Well, in the simplest terms, a mortgage is a special loan that you’ll take out to help pay for your home. You can take out a mortgage from a wide range of lenders (as long as you’re approved), usually including your regular bank.
Speaking broadly, mortgages are more complex than other loans because they’re actually linked to your home purchase. Besides the lump sum loan amount, there will be other important details, stipulations, and responsibilities that make up the conditions of your agreement.
In other words, your mortgage is a formal legal contract. If you don’t respect the conditions of your agreement or are unable to pay your mortgage back, your lender will have the right to take your home.
That’s why it’s important to understand the details of your mortgage and pick the best one for you.
Dreaming of a life outside of the big city? Explore these other blogs for helpful insights about buying a home in Durham Region and the Kawartha Lakes.
- 5 Reasons to Move to Lindsay
- How to Maximize Your First Home by Moving Outside of Toronto
- What to Love About Waterfront Living
Your Mortgage Agreement: Key Details
Interest
Like (almost) any loan, your mortgage will come with interest.
However, finding the right mortgage isn’t always as simple as picking the one with the lowest interest rate. In fact, interest can be quite complicated.
As a borrower, you’ll have the opportunity to pick between a fixed interest rate – meaning the interest rate won’t change throughout the term, or a variable interest rate in which your interest costs will fluctuate in response to larger economic factors.
Term
The term of your mortgage refers to how long the conditions and details of your contract are in effect. Once the term is up, you can pay the remaining amount in full or renew it. In Ontario, five years is generally the most common mortgage term. However, you can select a longer (or shorter) timespan if it better suits your needs.
Payment Frequency
Payment frequency refers to how often you make mortgage payments. Once again, you’ll have options. Choices can vary by lender, but most buyers can pick from monthly, bi-weekly (every two weeks), or weekly payments.
Amortization
When you make a payment on your mortgage, your money goes towards two different costs: the amount of the loan itself, as well as the built-up interest. Amortization is the amount of time it takes you to pay off your mortgage in full.
The longer the amortization period you choose, the lower your recurring payment will be. However, the longer it takes to pay off your mortgage, the more interest you will accrue. Therefore, deciding on the right amortization is a bit of a balancing act.
Getting ready to buy a home? Check out these other pages from our site for helpful info and insights!
- How to Purchase a Home With a Family Member
- Moving Up to a New Home – Should You Buy or Sell First?
- Explore Available Listings in Durham Region & the Kawartha Lakes
Making the Most of Your Purchase
If you’re gearing up to buy a home in the near future, you won’t want to head to the market without a professional expert by your side. That’s where we come in!
At Puckrin & Latreille, we know the buying process inside and out, and we’re happy to help every step of the way. Whether you want to know what you can afford in today’s market or where to find the right mortgage for you, we’ve got you covered.
With 175 years of combined experience right here in Durham Region and the Kawartha Lakes, we know everything there is to know about local homes and properties. Whatever your dream home looks like, we can help you find it.
Looking for a smooth and enjoyable home-buying experience? Puckrin & Latreille can help you find the perfect home. Ready to get started? Call 905-985-7300 to reach our team or click here to send us an email.
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