You have been looking through the Toronto real estate listings, wondering if now is the time to go out and start looking for a new home. Maybe you are a first time home buyer, maybe you have purchased before. Either way, this is a big decision with a lot of money involved.
Not the least of your concerns will be the type of mortgage you get to cover the cost of your home purchase. First time home buyers, in particular, often make the mistake of jumping at the first loan offered to them when they go and get approval from a lending company. The fact is, there are many different types of mortgages you can get to pay for your Armour Heights home.
One of the big distinctions between mortgages is the way the interest is calculated. It's also the area in which the home buyer stands to lose, or save, the most money. So before you go out looking at different Georgetown Ontario homes for sale, make sure you have decided between a mortgage with a fixed rate, or a mortgage with an adjustable rate.
Both types of mortgages have their pros and cons. With a fixed rate, you will be paying the same interest throughout the term of your loan. If the current interest rate is at 5% when you find the right house for sale in Oshawa and purchase it using a fixed rate mortgage, then you will still be paying 5% four years from now. If the national interest rates shoot up to 15% (which they have been known to do) you will still only be paying five, at least until your amortization period is up (and that's usually in five years from the start of the loan).
A variable rate, on the other hand, means that your interest rate will change with the national interest rates. It might be 4% when you are looking at Mississauga homes for sale, 3.8% when you buy and take out your loan, and 5.5% two years from now. You will pay the 3.8% until the interest rates go up, then pay 5.5% after that.
The trick to this is deciding where the best savings lie.Obviously, no one wants to be paying 10% interest on their mortgage for a few months. But, if mortgage rates are currently low, a variable rate might be the way to go. Remember you can always lock in when it looks like rates are going to get higher.
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