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Today, more than ever, there are numerous mortgage options available. Don't be confused Here at the Gibbard Group, our Mortgage Consultants can help you find the best product for your needs and negotiate you the best rate. They do the research for you, enabling you to avoid the frustration and confusion of having to do it yourself, and explain the available options.
Conventional or high-ratio A conventional mortgage is a loan for no more than 75% of the appraised value or purchase price of the property, whichever is less. The remaining amount required for a purchase (25%) comes from your resources and is referred to as the down payment. If you have to borrow more than 75% of the money you need, you'll be applying for what is called a high-ratio mortgage. Here's how a high-ratio mortgage works: You must have at least a 5% down payment when you buy a home. Any purchase where the down payment is between 5% and 24% is considered a high-ratio mortgage, and the mortgage must be insured by the Canada Mortgage and Housing Corporation (CMHC) or GE Capital Mortgage Insurance Company (GEMICO). The insurer will charge a fee for this insurance. The amount of the fee will depend on the amount you are borrowing and the percentage of your own down payment. Typical fees range from 1.00% to 3.25% of the principal amount of your mortgage. This amount can be paid up front or added to the principal portion of your mortgage. A Mortgage Consultant @ the Gibbard Group can help you determine the exact amount. Fixed -rate: Variable -rate: Open or Closed Open mortgages can be paid off at any time without penalty and are usually negotiated for very short terms. They are suited to homeowners who are planning to sell in the near future or those who want the flexibility to make large, lump-sum payments before maturity. Closed mortgages are commitments for specific terms. If you want to pay off the mortgage balance, you will need to wait until the maturity date or pay a penalty. Generally speaking, the closed mortgages are usually at a cheaper rate than the open mortgages. What terms and payment options should you choose? It all depends on what you want. Your Gibbard Group Mortgage
Consultant will assess your personal situation and needs to
find the best mortgage for you at the best rate. There area
number of payment options to choose from such as weekly, bi
weekly or monthly. Please note that not all lenders offer these
payment options with all their products. Contact us to go through
your options. back to top of page 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. 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 your Gibbard Group Mortgage
Consultant 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, an extra payment a year is made directly against principal.
The surprising effect of this one extra payment 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.
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