Few of us invest
time and effort into researching and securing best deal for a mortgage to purchase our home.For most of us, our house is single most important and expensive purchase we ever make!
We invest a lot of time and effort into finding perfect property in best location and with as many of features from our wish list as possible, yet, when it comes to finding best deal for a mortgage, we take what is offered rather than researching and securing best mortgage for our situation.
When you consider that average homeowner will pay out more in interest over lifetime of their mortgage than home originally cost, you can see why getting yourself best deal for a mortgage now, could save you tens of thousands of dollars in interest over 20 30 year term of your home loan.
Your research for best mortgages or loans and repayment options currently available can be carried out on internet, thus making whole process that much more convenient and time efficient for you.
Mortgages are not a "One Size Fits All!"
Mortgages come in many different forms and you need to be aware of various forms in order to determine which one is best mortgage for you and your unique circumstances.
Basically, mortgages fall into one of following categories. Lenders will have variations of these basic categories, but armed with this information, you will be able to sort through choices for just right package.
Fixed Rate Mortgages:
Loan with an interest rate that remains at a specific rate for entire term of mortgage/loan. Approximately 75 per cent of home mortgages are this type. A fixed rate mortgage is often considered best mortgage for first time buyers as you can establish a consistent relatively fixed budget of household operating expenses.
ARM's or Adjustable Rate Mortgages or Variable Rate Mortgages:
A mortgage/loan with an interest rate that adjusts or varies with changes in rates paid on Treasury Bills or bank Certificates of Deposit. In Canada, rates vary according to posted weekly Bank of Canada rates.
To offset risk associated with an adjustable rate mortgage, some lenders offer various 'capping' options. Often, they fix or limit maximum level to which interest rate you are subject to can rise for a given period of time. Sometimes they fix cap per year and sometimes for lifetime of mortgage.
Adjustable or variable rate mortgages can be very attractive as usually rates are considerably lower than for fixed rate mortgages. They are an excellent vehicle for borrowers who are attentive to rate fluctuations and prepared to 'lock in' their mortgage when interest rates start climbing.
Balloon Mortgages:
A mortgage in which monthly payment is not intended to repay entire loan. The final payment is a large lump sum of remaining principal. Balloon mortgages are often only partially amortized and requiring a lump sum repayment at maturity.
