I get asked a lot of questions as a Brampton mortgage broker. This short article will talk about the 4 top mortgage questions every borrower should ask before signing up for his/her mortgage, and if you have additional questions to ask when signing a mortgage, read through till the end.
What Mortgage Term is Best For Me?
This, for good reason, comes at the beginning of this list of top mortgage questions, and here’s why. A term is a period for which the mortgage rates are set for. Terms typically range from 6 months to up to 10 years. A longer term means a higher interest rate and a shorter term means a lower interest rate.
While this might lead you to believe that a shorter term is preferred option. That is not always the case. Other factors like the financial market or your personal situation might usually contribute to the decision about which term is the best for you.
What Amortization Will Work Best For Me?
Amortization is the total amount of time that you have to pay the mortgage off. The industry’s benchmark amortization period is usually 25 years. A shorter amortization generally means: paying less interest, getting mortgage free quicker, building equity faster in the house, and the monthly payments are usually more. This is why this question features highly when it comes to important mortgage questions.
Can I Make Lump-Sum or Other Prepayments on My Mortgage Without Being Penalized?
Most lenders let you make lump-sum payments and increase the monthly mortgage payment to a maximum amount per year. Be careful when getting ‘no frills’ mortgage products offering the lowest rates as these might not allow you to make prepayments.
Is My Mortgage Portable?
The last of these four important mortgage questions, this delves into porting a mortgage. Porting the mortgage means that you are allowed the take your old mortgage to a new house you have bought. Fixed rate products usually have a portability option. Lenders often use a ‘blended’ system, where your current mortgage rate stays the same on the mortgage amount ported over to the new property and the new balance is calculated using the current rate. Usually, in variable rate mortgages, porting is not available.
I hope you found this article about the top questions when getting a mortgage useful. For more information about mortgages, and tips & tricks, or if you have additional questions to ask when signing a mortgage, please view more of my blog posts.
