3 Things You Must Know about Mortgages
Getting a mortgage can be a hard process to navigate. In this short post we’re going to discuss 3 things you must know about mortgages, including: qualifications, down payment, and longer terms.
Below are 3 things you must know about mortgages:
When you apply for a mortgage, lenders consider two key factors: your down payment and income. The down payment refers to your own funds that will be used for the purchase (e.g., cash on hand, savings, and gifts from relatives). Your down payment can be as little as 5% of the price of your new home (maximum home prices based on geographical location apply when the down payment is less than 10%). Your income determines the size of mortgage payments you can carry, and therefore the total amount of the mortgage debt you can take on. Source: CHBASaskatchewan.com
A borrower has to have at least 5% of the property’s value for a down payment. The lender supplies the rest of the money to pay for the house and the borrower slowly pays back the lender. To avoid CMHC insurance premiums, a borrower must put 20% of the house’s value up as a down payment. Source: FinancialUproar.com
Generally, mortgage terms are five years. After that time, you'll likely have to refinance at a different interest rate. You can, however, get longer terms, such as seven or even 10-year rates. You'll end up paying more per month – the longer the term the higher the interest rate – but you'll be able to hang on to those terms for a long time. That's attractive in today's low interest rate environment. A lot of institutions are offering low 10-year rates; if rates rise over the next decade you could end up paying a lot less than if you had to agree to a new rate in 5 years. Source: CanadianLiving.com
I hope these will assist you in choosing the right mortgage for you. For more information please give us a call.