Mortgage management for your first Calgary home
When you are considering financing options for your first Calgary home you will want to ensure you are making the best decisions to save money and have financial stability into your future. There are many options when it comes to financing your home, you can choose from closed term mortgages or variable rate open mortgages as well as an abundance of prepayment options. To help you in making informed decisions I have outlined a few tips:
1. How much mortgage can you afford? When qualifying for a mortgage you must consider all your current financial obligations such as loans, credit cards, debts etc. This is an an opportune time to discuss your financial picture and obligations with a qualified mortgage professional.
2. Prepayment Options: Different lenders offer different terms and conditions in your mortgage. Just like those on any contract you need to be aware of your options and choose a mortgage that offers you the options that best suit your needs and lifestyle. Some lenders will allow you to prepay up to 10% per year of the original balance while others will go as high as 25%
3. Payment Acceleration : If you choose to pay your mortgage every 2nd week instead of monthly or bi-monthly at the end of the year you would have made an extra payment, this ‘extra” payment that you have made is directly applied to the principal of your mortgage and could save you a substantial amount of interest and overall shorten your mortgage amortization.
4. Payment Stability: Many first time home buyers take solitude in knowing what thier payment will be over their term (typically anywhere from 3 to 7 years), which is why many will choose a closed mortgage which will guarantee the interest rates and payment for a preselected period of time. But just wait… those who are little more “daring” and go for a variable rate mortgage could potentially save thousands in interest as the variable rates are historically lower than locked term rates. The downside of course is that your payment could change if interest rates go higher.
5. Blended Mortgages: Now if I hadn’t confused you enough some lenders allow you the options to blend different mortgages together to meet your needs. As an example you could take a portion of your mortgage as a revolving credit line and leave another portion as a locked term. This would allow you to have the best of both worlds essentially.
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