The choices are many.
The first question you have to ask is with which bank would you like to deal?
Do you have a preference for branch bank or on-line banking? Get a preapproval now and lock
the rates in. If rates fall in the meantime you get the lower rate. You can only gain.
A big decision is whether to go variable mortgage or fixed mortgage. This can be dependent on timing. In general if rates are static or climbing, you
can elect for a fixed rate to reduce risk and lock in that low rate.
If you think rates are stable or decreasing you can elect for variable. The advantage with
variable is that the rate is low. We can obtain Prime less .75 or Prime less .80 with the option to
convert to fixed at any point. Many variables come with teaser intro rates. Some variables have
capped limits. There are a lot of options.
At this point in time we are strongly recommending the fixed products.
Other choices to think about are term, amortization and frequency and prepayments. Term is the immediate length of the contract with the bank. When the term if up, you are
free to do whatever you want. You may want to stay or move. Terms range from totally open to 10 year fixed.
We can obtain mortgages fixed for up to 18 years if you require. It is not common but it is
available.
Amortization is the overall length of the mortgage. Generally you start at 25 years but
if your cash flow is great you may wish to payoff the mortgage sooner. When you make prepayments, you are
automatically reducing the amortization period!
You can payoff sooner also by using payment frequency. Bi-weekly will cut years off of
the mortgage. Your prepayments are important. Different banks have different policies but a
good general guideline is that you can increase your monthly payment up to 15% or even double in some cases and in addition you can knock down up to 15% or 25% of the original
principal once per year.
Products are becoming more and more interesting. Some banks are offering a 30 year
amortization, while others offer interesting and unique products such as STEP or combination mortgages, where by the mortgage can be arranged in a custom way to suit you. Very flexible.
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