DO WE HAVE A MORTGAGE PLAN?

The booming housing market and demand for mortgage financing has prompted the financial community to develop a broad array of mortgage products.  One of the most common questions I am asked by my clients is what type of mortgage is best for me?

Here are some of the most common products and options available today;

Conventional Mortgage a conventional mortgage loan does not exceed 80% of the purchase price (or appraised value which ever is lower) of the property.

Hi-Ratio or Insured Mortgage a mortgage loan exceeding 80% of the purchase price (or appraised value which ever is lower) and insured by Canada Mortgage and Housing Corp or a private insurer in the event of default.

Second Mortgage an additional mortgage on a property that already has a first mortgage. The rights of the provider of the second mortgage take priority after the rights of the first mortgage lender.

Open or closed mortgage a closed mortgage agreement does not provide for payout before maturity without penalty, beyond the terms and flexibility set out in your agreement with the lender. An open mortgage provides for pre-payment or repayment at any time during the term of the mortgage.

Fixed and variable rate mortgages a fixed rate mortgage offers the security of knowing exactly what your mortgage payments and interest costs will be. Variable rate mortgages fluctuate with the Prime Rate of interest set by the Bank of Canada.

Pre-payment a pre determined schedule of options established at the outset of the mortgage, which allows the borrower to increase the regular monthly payments and/or to make annual lump sum payments 

So what is best for us?

To determine what kind of mortgage is best for you here are some of the questions you should ask yourselves;

Determine your long-term repayment goals, such as ensuring the maximum amortization of the mortgage is consistent with your planned retirement date.

Do we have access to every mortgage lender and what is the most competitive rate?

Are we better suited to a fixed rate mortgage with a known repayment schedule?

Is there sufficient flexibility in our incomes to consider a variable rate mortgage and possible fluctuations in interest rates?

Is a variable rate mortgage with a capped or convertible� option most appropriate to allow us to take advantage of the current low prime rate of interest with the protection of a ceiling or fixed rate? 

Will our income levels be interrupted for maternity or educational reasons?

Will our income levels change periodically due to pay raises, bonuses or commissions and does our mortgage have good prepayment options to allow additional income to be applied to debt repayment without penalty?  

If you dont feel you can answer any or all of these questions be sure to consult an accredited Mortgage Agent. With such a broad selection of products and options available it is important you have professional help in planning for the short and long-term repayment of your mortgage in conjunction with your other household financial needs. An accredited Mortgage Agent will help you select a mortgage product that is competitively priced and will develop a repayment plan with flexible options that fits your anticipated income levels and family needs during the term of the mortgage.

To apply for a mortgage online click here.

CAM BROWN amp

Cam Brown is a licensed Mortgage Agent with Invis Financial and has been designated an Accredited Mortgage Professional� by his Industry. Mr. Brown has over 20 years of banking and mortgage brokering experience and is a financial services specialist.