There are a number of residential mortgage products for homebuyers. The wide portfolio of residential mortgage rates and packages is meant to suit the varied needs and diverse situations of homebuyers. As a homebuyer, if you want the best residential mortgage, then you must learn about various products and compare between them to be able to find your best pick.
Open or Closed Mortgage – Which one to Choose?
The first step is to choose between an open and closed mortgage. Closed mortgage products are widely popular. Their rates are significantly lower than the open mortgage products. The way they differ is as follows. Closed mortgage plans are available both in fixed and variable form, but it has some restriction on the principal amount you can pay during each of the mortgage years. For instance, if you prefer to pay off the principal before the set term, then you will have to pay a penalty something like a 3-month interest charge.
On the other hand, open mortgage plans let you pay off the entire balance amount anytime during the term as per your choice. The one downside to this kind of plan is that you need to pay a premium for exercising this option. Most often, homebuyers who expect a lump sum amount in the near future by some means choose to go for the open mortgage options.
Fixed mortgages are getting Hot!
Most kinds of mortgages in Canada are fixed mortgages. They are highly popular and make about 66% chunk of the total number of mortgages in the country. Fixed mortgage allows you to set it and fully forget about it. Many people deem this their choice since it protects the homebuyers against any fluctuation in the interest rates and therefore, the payment remains constant throughout the term of the mortgage.
Variable mortgage rates are typically lower than the rates of fixed mortgage plans. However, the one difference is that they can vary during the term of the mortgage. For instance, variable mortgages behave differently from time to time depending on the market trend. In other words, whenever the prime interest rate changes in the market, your mortgage payment is affected as a result.
Over a time, there is a possibility that your mortgage payments will change with variable mortgage. While the fixed mortgage enables you pay the fixed charge each month, the interest rates are higher on account of the security it offers the homebuyers.
Myriad Factors in Residential Mortgage Canada
While deciding on the best residential mortgage plan, you need to consider the prepayment option too. This facility outlines the flexibility that comes with a residential mortgage plan that enables you pay off a bulk amount towards the principal if you happen to receive any cash assistance, inheritance or bonus sometime during the mortgage term. It also enables you increase the mortgage payment anytime you want in order to pay off the principal amount faster. This facility allows you to shorten the mortgage term at your will.
The monthly prepayment option is the percentage increase allowance on your mortgage payment and lump sum prepayment option pertains to the original mortgage amount. There is however monthly or annual payback percentage limits to these options.
Canada MGC – Transparency in Residential Mortgage Guidance
Considering the aspects noted above, selecting the best residential mortgage plan that works well for you is our aim. Our prime motive is to select the best deal that suits your lifestyle and financial situation. Whether it’s the low mortgage interest rate or flexible terms on residential mortgage, Canada MGC professionals can handle it all.
To know more on best mortgage deals, call 1-866-963-CMGC (2642) and get in touch with CMGC mortgage professionals.