Mortgages explained

Buying a new home is a major landmark in your life – especially if it’s the first time you have ever purchased a property. It’s also most likely to be the biggest financial commitment that you will ever make in your life. If you are taking out a mortgage (and you most likely are), you’ll need to understand the different options available to you.

It is imperative that you do your research before you negotiate your mortgage, and you will need to be comfortable with the person you are talking to. Owner of Capital Mortgages in Ottawa; Stefan Krepski explains how you should ask lots of questions when looking for a mortgage, and will need to be comfortable with the financial product being advised to you.

Your research can start online. You will be able to search for mortgage advice on the website of Capital Mortgages, as well as those of the major banks. Here you’ll find glossaries of important terms, calculators and how-to guides.

Stefan Krepski talks about the importance of using a qualified mortgage professional to find the best rate. A broker will take your details (proposed home purchase, income details etc), and obtain the best deal from credit unions, banks and trust companies on your behalf.

How long your mortgage lasts for until you need to renegotiate is an important piece of information you need to find out, especially as this ranges from six months to ten years. You will also need to find out about interest rates, and choose a longer term if you believe interest rates will rise.

Next you will need to choose between a fixed-rate mortgage and a variable mortgage. The former can offer more predictability, says Stefan Krepski – however, many variable mortgages will enable you to “lock in” a rate if they start to rise. However you will need to find out about penalties for costs if you take this route.

Remember – making more frequent payments on your mortgage can affect your accumulation of equity and how quickly you will pay off your mortgage. Many consumers are choosing weekly or bi-monthly payments instead of the conventional monthly option. Stefan Krepski explains how spreading your payments over 48 or 52 weeks could help you to pay your principal more quickly.

Finally, you may want to consider amortization, which is the number of years it will take to pay off the entire mortgage. The longer this period, the lower your monthly payments will be – definitely something to consider.