Down Payment
The down payment is the difference between the property’s purchase price and the amount financed through a mortgage. Most often, the difference is paid in cash. Most people save up for their down payment for years before even beginning the house hunting process.
How much is the average down payment?
The down payment is usually 5-25% of the home’s purchase price. By law, it cannot be less than 5%.
The down payment is usually 5-25% of the home’s purchase price. By law, it cannot be less than 5%.
For down payments under 20%, your lender will require you to purchase mortgage default insurance, which is available through the Crown corporation CMHC or private insurers Genworth and Canada Guaranty.
Pro tip: Need help saving for your down payment? Try a tax-free savings account! This is a great option for those who want to keep their money easily accessible and tax sheltered. You can even further invest your funds into a low-risk investment like a GIC within your TFSA to give them a boost. Click here to learn more about TFSAs.
Mortgage Term
The mortgage term is the set amount of time a lender will loan you their money for your mortgage at a specific interest rate. They can last anywhere from 6 months to 25 years – 5-year terms are the most popular. View today’s best mortgage rates here »
What happens at the end of my mortgage term?
One of two things happen at the end of your term: either the principal amount is due in full, or (most likely) you’ll need to renew your mortgage. Renewing your mortgage is a good time to shop around for a better rate or product. Click here to compare mortgage rates and start saving »
Amortization
The Amortization is the amount of time it will take to repay your mortgage in full. The amortization period is based on your monthly payment amount at the current interest rate, and depends on the frequency of payments. In Canada, you can choose mortgage amortization periods up to 25 years for CMHC-backed mortgages, and up to 30 years for conventional mortgages.
Accelerated Payment
Most people think of mortgage payments as “monthly payments”. But did you know that you can choose an accelerated payment schedule that will increase the frequency of your payments to every two weeks (biweekly rapid payments), or every week (weekly rapid payments)? Not only will this save you money, but you’ll be mortgage free sooner – and more frequent payments mean less interest!
Original Article Cited from: RateSuperMarket.ca
Visit www.marcopontillo.com for more information.
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