As a first-time home buyer, you’ll want to learn as much as you can about mortgages: an overview —What they are? How they work? and How they can benefit you? While you may be using a mortgage professional during the home-buying process- the more knowledge you have the more you’ll know what you need and want in a mortgage.
Without further ado, here’s mortgages: an overview.
What is a Mortgage?
A mortgage is a financial loan given by a bank or mortgage lender to help you purchase a home. It allows you to buy a home sooner, than if you had to save up for the entire purchase price. The house acts as collateral for the money you are borrowing from your lender.
How do Mortgages Work?
- The buyer uses a mortgage to pay the seller for the property, and the buyer repays any money borrowed. Plus interest and fees, over a set period of time (example: 5, 10, 15, 20 or 25 years).
- The buyer pays the lender typically every month.
- A portion of the payment is used to pay down the amount borrowed (principal) and a portion of the payment goes to the interest.
Choosing the Right Mortgage
Depending on what your current financial situation is, who your current mortgage company/bank is, and where do you plan on living in Canada, there are many types of mortgages that cater to different types of people.
For instance, here at Sunlite Mortage, we offer the reverse mortgage solution to Canadian citizens aged 55 or older who have a decent income under their belt. Also, for those who are new to Canada and have been full-time employees for over 3 months, we offer the New to Canada mortgage. Of course, we also offer mortgage options to new and current homebuyers in Canada.
This is one of the biggest decisions you will make. Therefore, consult a Sunlite Mortgage Professional for guidance and support.
Some things to consider:
- Type of mortgage: Ex. For new homebuyers, fixed-rate or variable-rate mortgages
- Mortgage term: The length of time a mortgage rate, and conditions set out by the lender are in effect. Generally, terms can range from months to years.
- Amortization period: The total length of time to pay off your mortgage. Typically people choose 25 or 30 years amortization periods.
A longer amortization period sometimes mean lower monthly payments. But it can also mean you’ll pay more interest- because you’re taking longer to pay back the mortgage principal.
Note: if you choose an amortization over 25 years, you must have a down payment of at least 20% of the purchase price.
A great tip to make paying your mortgage easier: Schedule your payments to occur when you get paid.
Our Sunlite Mortgage agents will walk you through the choices available and help you identify the most suitable mortgage product to your current situation. All while looking at your short to long term goals. Call a Sunlite Mortgage agent today at 1.877.38LOANS and we will be happy to help you with a mortgage!