Securing a mortgage is a pivotal part of your real estate journey.ย While it can feel overwhelming, understanding some of the key concepts can help you choose what mortgage structure best suits your needs. Here are some mortgage terms you should know;
๐ ๐ผ๐ฟ๐๐ด๐ฎ๐ด๐ฒ ๐ฅ๐ฎ๐๐ฒ
โคย The rate of interest charged on a mortgage by the mortgagee (the lender).
๐๐บ๐ผ๐ฟ๐๐ถ๐๐ฎ๐๐ถ๐ผ๐ป ๐ฃ๐ฒ๐ฟ๐ถ๐ผ๐ฑ
โคย The length of time it will take you to pay off your mortgage in full. The most common amortization period is 25 years.
๐ ๐ผ๐ฟ๐๐ด๐ฎ๐ด๐ฒ ๐ง๐ฒ๐ฟ๐บ
โคย The length of time your agreed upon mortgage (interest) rate is in effect. Mortgage terms can range from 6 months to 10 years. Once the term is up, you can renegotiate your terms with your lender.
๐๐ถ๐ ๐ฒ๐ฑ ๐ฅ๐ฎ๐๐ฒ
โคย Your interest rate is fixed for the duration of your term, and will not fluctuate.
๐ฉ๐ฎ๐ฟ๐ถ๐ฎ๐ฏ๐น๐ฒ ๐ฅ๐ฎ๐๐ฒ
โคย Your interest rate is not fixed and will fluctuate (with market rates) periodically throughout the duration of the term.
๐ข๐ฝ๐ฒ๐ป ๐ ๐ผ๐ฟ๐๐ด๐ฎ๐ด๐ฒ
โคย Lets you pay off your mortgage in full or part anytime without penalties.
๐๐น๐ผ๐๐ฒ๐ฑ ๐ ๐ผ๐ฟ๐๐ด๐ฎ๐ด๐ฒ
โคCannot be repaid in full, or in part, during its term without penalties, except as permitted in the mortgage agreement.
โค For more information on mortgages read:
- The Mortgage Stress Test – What Is It?
- Understanding Construction Mortgage Loans
- Mortgages; The Difference Between Pre-approval & Pre-Qualification
Whether you are a first time buyer, or are ready for your next move, having a trusted mortgage professional to help guide you is invaluable and can save you big bucks!
