The purchase of a home, whether for the first time or the third time, can be a test of nerves and skills. It is therefore always useful to have information before making this raid in this particularly crazy real estate market. The good thing about the Toronto real estate market is that it has remained relatively stable while offering lower real estate prices and lower interest rates on loans.
Make payments at home
Many mortgages offer the opportunity to meet your responsibilities on a weekly or bi-weekly basis. This could be the desirable way for several reasons. This will save you money and allow you to pay off your mortgage loan completely four years earlier. The second reason is that it allows you to better budget by making payments in the same way that your salary is paid into your bank.
Make additional payments
By paying a supplement, you will save interest on the loan and you will leave more money in your pockets. Look for something called "lien payment". For example, a 20% preferred payment would allow you to pay $ 20,000 in one year on a $ 100,000 mortgage. Make sure the lien payment is flexible. In other words, it will allow you to repay lower amounts on the mortgage as often as you want. You will be amazed at how quickly you pay a mortgage by paying $ 1,000 more a time or two.
Reduce CMHC fees
If you take out a mortgage representing more than 75% of the purchase price of your home, this mortgage must be insured by the mortgage insurance of your choice, Canada or GE. The premium charged decreases as the amount of your down payment increases. If you finance at 95%, the premium will cost an additional 2.75% on the mortgage. Paying 25% down payment completely eliminates the fees.
Largest deposit the better
More importantly, the higher the down payment, the lower the amount of interest you will pay over the life of the loan. However, pay only what you can afford. Do not hurt yourself by forcing a larger down payment than you can actually afford at that time. This may require you to become more into debt if you are not careful.
Short term or long term, which is better
Generally, with loans, the shorter the term or rate guarantee, the lower the rate. This is not always the case, the rule is not engraved in the stone. However, history shows that most often this rule of thumb applies. And while variable rates have the potential to save interest and a rapid rise can sometimes lead mortgage lenders to distraction and indebtedness. When considering a variable rate loan, it is essential to examine the risk tolerance and cash flow before signing the dotted line. If in doubt, talk to an expert for more information.