Instant Online Mortgages Mississauga
 A mortgage is a
charge that uses a property as security
to ensure that the debt is repaid. The borrower is referred to as the mortgagor,
the lender as the mortgagee. The actual loan amount is referred to as the
principal, and the mortgagor is expected to repay that principal, along
with interest, over the repayment period (amortization) of the mortgage.
Call Amit, when you buy /sell your Mississauga home or condo to get pre-approved
for the competitive rates with flexible payment terms, automated loan approvals
and the customer service you deserve.
You can also use your mortgage for financing
many different things, including: purchasing your
Mississauga second home or a condo, refinancing to consolidate
your debts, financing a renovation,
financing the purchase of other investments etc. Amit can put you in touch with mortgage
professionals in Mississauga having access to over 80 lending institutions, you get
the choice, convenience, and counsel you deserve.
The shortest answer to that question depends on number of factors.
The most important is your gross household income, your down payment and
the mortgage interest rate. Lenders will also consider your assets and
liabilities. Your own lifestyle and debt comfort zone also comes into play. To help you estimate the maximum mortgage you can afford CMHC has developed
the following easy to use
Affordability
calculator
Back to Top
A pre-approved mortgage certificate in Canada is a written mortgage commitment
that you will get a mortgage for a set amount of money, at a specific rate
of interest that is guaranteed for 60 to 90 days depending on the financial
organisation you choose. The commitment is made subject to a financial
assessment and property appraisal. The service is free and without any
obligation.
If rates go higher, your rate will not be affected, and if rates go lower,
you get the lower rate. This protection is solely responsible for savings
thousands of dollars for many people who obtained a pre-approval and the
rates increased afterwards.
With pre-approved loan you can confidently negotiate an offer on
a home. A seller also prefers to negotiate an offer of a purchaser who
has been pre-approved. With more lenders, lower rates, and no-cost, no-obligation,
make us your choice for your pre-approval.
Back to Top
With a fixed-rate mortgage, the interest rate is set for the term of the
mortgage so that the monthly payment of principal and interest remains
the same throughout the term. Regardless of whether rates move up or down,
you know exactly how much your payments will be and this simplifies your
personal budgeting. In a low rate climate, it is a good idea to take a
longer term, fixed-rate mortgage for protection from upward fluctuations
in interest rates.
A variable-rate mortgage (also called adjustable-rate) provides a lot of
flexibility, especially when interest rates are on their way down. The
rate is based on prime and can be adjusted monthly to reflect current rates.
Typically, the mortgage payment remains constant, but the ratio between
principal and interest fluctuates. When interest rates are falling, you
pay less interest and more principal. If rates are rising, you pay more
interest and less principal. Make sure that your variable-rate mortgage is open or convertible to a
fixed-rate mortgage at any time, so that when rates begin to rise, you
can lock-in your rate for a specific term.
Closed vs. Open mortgage - What's the Difference
An open mortgage allows you the flexibility to repay the mortgage at
any time without penalty. Open mortgage interest rate is higher than
closed mortgages by as much as 1%, or more. They are normally chosen if
you are thinking of selling your home, or if expecting to pay off the
whole mortgage from the sale of another property, or an inheritance.
A closed mortgage offers the security of fixed payment for terms from 6
months to 10 years. The interest rates are considerably lower than open,
and if you are not planning on any one of the above reasons, then choose
a closed mortgage. Nowadays, lenders offer as much as 20% prepayment of
the original principal, and that is more than most of us can hope to prepay
on a yearly basis. If one wanted to pay off the full mortgage prior to
the maturity, a penalty would be charged to break that mortgage. The penalty
is usually 3 months interest, or interest rate differential.
Back to Top
Term refers to the length of time which a specific mortgage agreement covers,
generally between 6 months to 5 years. When the term matures, the balance
of the mortgage is either paid off or renegotiated for another term at
the rates in effect at the time.
Amortization Period is the number of years it would take to
repay the entire mortgage amount based on a set of fixed payments. The
longer the amortization, the more interest is paid over the life of the
mortgage. Therefore, when choosing the amortization period, careful
planning should be done to meet your cash flows. Remember, the
amortization can be easily shortened after the closing, by simply making
arrangements to increase your payments. These days banks offer up to 40 year amortization period.
First-time buyers are now choose to pay small deposits and stretch out
payments for as many as 40 years in order to reduce the spending each
month. A long-amortization mortgage, combined with mortgage insurance,
can help get someone into a home far sooner.
Back to Top
A down payment of 20% or more is a conventional mortgage. If your
down payment is less than 20%, you would qualify for a high ratio
mortgage on which you would have to pay insurance premiums.
Back to Top
What mortgage term should one take?
When you're looking at term and interest rates, look also at what you can
live with in terms of payment amounts, because trying to predict where
interest rates are going is a tough job. There are many forces that affect
Canadian interest rates - economic, political, domestic, and international.
Even the best economists cannot pinpoint this.
Predicting interest rates is very much a gamble and one should be prepared
to keep a close eye on the market.
Here's a suggestion: If you feel that rates are at a point you can live
with and you want to guarantee that rate as long as possible, go with a
long term (5 years, 7 years, and 10 years). If interest rates appear to
be rising, take advantage of the lower rate for as long as possible, and
remember, if you sell your property, you can take the mortgage with you
to the new property or have someone assume the mortgage. It could prove
to be a great selling feature if you have an assumable mortgage at very
low rate.
If rates appear to be falling, you can choose a shorter term (6-month convertible
or variable-rate mortgage) that offers the flexibility to lock-in to longer
term at any time, just in case the rates start going the other way.
Back to Top
By providing mortgage loan insurance to lenders, CMHC and some other
private lender enables you to finance up to 100% of the purchase price
of a home. This means you can buy a property with as little as zero down;
either with your own or borrowed funds. Many lenders offer both 100% financing
and also give up
to 7% cash back to new homeowners who can proof a stable employment income
and strong credit. This way, the homeowners use cash back incentive for
legal costs, furniture purchase, moving expenses etc.
Back to Top
For most people, the hardest part of buying a home — especially a first
home — is saving the necessary down payment. Beginning April 21, 2007,
if buyers can put down at least 20 per cent of the cost of home, they
don't have to buy mortgage insurance.
Mortgage insurance protects lender
against payment default.
The mortgage loan insurance premium is calculated as a percentage of the
loan and is based on the size of the down payment in relation to the
total purchase price. For example, a down payment of 5% would incur an
insurance premium of 2.75% of loan value plus PST. You can either pay
this premium in cash or have your lender add it to your mortgage amount.
CMHC Rates (Download
complete list of CMHC products ) |
|
Loan Amount as a % of the Value of the Home |
Purchase Premium on Total Loan |
Premium on Increase to Loan Amount for Portability and Refinance * |
|
Up to and including 80% |
1.00% |
2.75% |
|
Up to and including 85% |
1.75% |
3.50% |
|
Up to and including 90% |
2.00% |
4.25% |
|
Up to and including 95% |
2.75% |
4.25% |
|
90.01% to 95%-CMHC Flex down |
2.90% |
4.80% |
| * For
Portability and Refinance, the premium is the lesser of the
premium on the increase to the loan amount or, the Purchase
premium on the total loan. In the case of Portability, a premium
credit may be available under certain conditions to reduce the
Purchase premium. Note: See your lender for premium surcharges
and other terms and conditions. |
| Back to Top |
|
|
Reduce amortization period
One way to pay off your mortgage faster is to opt-in for a
shorter amortization period, that is the number of years it would
take to repay the entire mortgage based on a set of fixed payments.
The longer the amortization, the more interest is paid over the life
of the mortgage. Therefore instead of paying off your loan in 35
years (420 months); you can choose shorter amortization period of 25
year (300 months), 15 year (180 months) or even lesser. Make sure
that the mortgage payment (principal + interest) does not hurt your
monthly cash flow. Don't forget to add property taxes and utility
charges to your monthly home expenses.
Pay bi-weekly or weekly mortgage payments
Once you
have the mortgage amount, rate and amortization period, your monthly
payment can be calculated. Now is the time to decide how often you
want to make your payments, because by selecting the right payment
frequency could literally mean thousands of dollars in long term
savings. You can save more by paying weekly or bi-weekly in
comparison to paying monthly.
If you have other payments throughout the month, bi-weekly may be
less stressful and easier to budget. If you are self-employed or
commissioned, and your income varies greatly from week to week, it
may be easier to pay monthly and use your prepayment privileges to
knock the amortization period.
Pre-payments--Pay extra payments against principal
This is one of the most important features to look for.
Having the prepayment privilege that works for you could mean a
difference of thousands of dollars over the life of your mortgage.
Although all financial institutions offer some form of prepayment
privilege, the amount and how it can be applied varies from one to
another. Some Banks offer as high as 20% per year. Ideally, you
should work your prepayment privilege as often as possible
throughout the year.
Increase your regular payment
The secret to borrowing is borrow early in your life. The reason is that
the future value of the dollar decreases. When you borrow early, your payments
are set. As time goes, your incomes increase, but your mortgage payments
stay the same, provided you locked-in to a long term, fixed
mortgage. Therefore, in the future you may be in a position to
increase our payment on your mortgage, regardless if you are paying
weekly, bi-weekly, or monthly. Any increase in payment is directly
going to pay down the mortgage, thus saving you thousands down the
road due to the effect of interest not compounding on that amount
for the life of the mortgage.
Again, this feature varies from bank to bank.
Double-up on
your payments
A few lenders will allow you to double-up
on your payments, and the extra payment goes directly towards the
principal. This is a neat feature for someone who prefers monthly
payments but wants the results of weekly and bi-weekly payments.
Early renewal
mortgage option
This is a great feature to have when
interest rates are on a rise. If you are locked-in to a term and the
mortgage will be maturing in months or years down the road, and the
mortgage rates are on a rise, you can renew your mortgage before the
maturity and lock-in the low rates for a new term.
Port your lower rate mortgage and avoid mortgage penalty
If you want to take your mortgage with you when you move, you can,
if your mortgage has a clause that allows you to do that. This
option allows you to continue your savings on your lower rate if the
going rates are higher, as well as avoid any penalties if you were
to break that mortgage. If you need a larger mortgage for the new
property, your existing mortgage amount might also be increased. As for the associated costs, since a new mortgage document
must be registered on title, legal fees and normal appraisal fees would
be applicable.
Let sellers assume mortgage
If you are moving and don't want to take your mortgage with you, or you
are selling and not buying, an assumable feature can allow the buyers
of your property to take over the mortgage, provided they meet the lender's
qualifying criteria. By doing so, you will not pay any penalties as you
are not breaking the mortgage contract. In fact, if your interest rate
is lower than those available at the time, your assumable mortgage suddenly
became a great selling feature for your property.
A word of caution here: Just because someone assumes your mortgage does
not necessarily mean you are off the hook for the responsibility. You must
get a release from the lender to ensure that you are no longer
liable for it. Some mortgage lenders automatically offer a release, but
with others, you must make the request, and do it through your lawyer.
Back to Top
No, mortgage interest is not tax deductible (on your principal
residence) in Canada, like in the US. Mortgage interest can be
deductible on your investment property. Speak with your accountant/
tax consultant for detailed information about
interest deductible mortgages.
Back to Top
|
