Never owned a home before?
Buying a home can be exciting and terrifying all at the same time!
You want to take advantage of today’s low rate environment but it can be overwhelming to sort through all of the options. Mortgage Dave will help get you the right combination of mortgage features, privileges and rate that is best matched to your needs. The right mortgage goes beyond just the rate – it’s important to also consider term, prepayment options, refinancing penalties, restrictions, and fees.
Getting professional mortgage advice is a great place to start. With my thirty two years of experience, I can help guide you through the process. Although mortgage debt is ‘smart’ debt, buying your first home is a huge financial decision and there is a lot to think about. The residential property you are looking to buy is probably the largest purchase, and biggest investment decision you have had to make in your life so far. Remember there are no dumb questions- so ask away!
I am happy to meet with you around your busy schedule. Once we have connected, I can provide you with a mortgage pre-approval which will let you know what you qualify for before you start shopping for a home. Call or apply online now, so I can get to work for you.
See my First Time Home Buyers guide below for a better understanding of how the process works.
What Type of Mortgage Should You Choose?
Today, more than ever, there are numerous mortgage options available. Don’t be confused.
We can help you find the best product for your needs and negotiate you the best rate. We do the research for you, enabling you to avoid the frustration and confusion of having to do it yourself, and explain the available options.
Terms and Payment Options
Short-term risk and variable
Fixed-rate: 6 month, 1, 2 & 3 year (open, closed and closed-convertible) 4, 5, 7 & 10 year closed
Variable-rate: 3, 4 and 5 year (open, closed, closed-convertible and capped)
Split-term: Combination of all possible terms (6 month through 10 years)
Self-directed RRSP: A specialty mortgage rate — term optional — within CMHC guidelines. Invest your own RRSP funds into all or part of your home mortgage.
What Terms and Payment Options Should You Choose?
It all depends on what you want. I will assess your personal situation and needs to find the best mortgage for you at the best rate.
Short-term risk and variable
If rates are low and stable, and/ or you are prepared to take a risk, you can generally pay a lower rate with a short-term mortgage. You simply roll over your term every 6 months, or float your rate against prime, with the option of locking in to a longer term at a later date. This is not for everyone, however, as sudden upward rate movements can have a significant impact on your payments. You may want to discuss this with me.
Any term 3 years or longer is considered “long term” in today’s economy. Because long-term rates are usually higher than short-term rates, you may not want to choose this option. On the other hand, by locking in you will avoid exposure to rate increases. You’ll have the comfort of knowing exactly what you payments will be and you’ll be able to manage your budget accordingly.
A mortgage which allows you to minimize — or hedge — your interest rate risk by splitting your mortgage into up to 5 parts. For example: A $150,000 mortgage could be split into five $30,000 segments with terms of 6 months, 1, 2, 3 and 5 year terms negotiated at today’s best rates. The average rate would rise or fall much more slowly than changes in the market, however, as only the shorter terms are affected by even the most volatile rate movements over the first few years. Confused? Talk with me.
Many lenders allow you to make a lump sum payment — usually 10% to 20% of the original principal balance. In addition, many mortgage products now include a “double-up and skip-a-payment” feature. This lets you “bank” extra mortgage payments for a rainy day, at which time you can “skip” them if you need to. Ask me to advise you on your options today!
Most mortgages now allow the amortization to be adjusted by increasing the payment on closed terms by 10% — 20% per year, once annually.
Most mortgages now come with the option to pay your mortgage at a frequency that matches your cash flow — weekly, bi-weekly or semi-monthly. The added benefit of the “accelerated” weekly and bi-weekly payments is that by dividing a regular monthly payment into two or four respectively, and deducting it at the new interval, two extra payments a year are made directly against principal. The surprising effect of these two extra payments a year is to reduce the amortization of the average mortgage by approximately 5 years, with cash savings at the end of the mortgage term.