Buying a New Home Blog Series - Part One - Low Interest Mortgage Approvals
- Author Paul Mangion
- Published April 1, 2012
- Word count 566
Buying a new home is exciting but involves preparation if you want to get the best deal. Getting the best deal will mean getting a good price on your home, negotiating a low interest mortgage, getting competitive quotes on homeowners insurance and mortgage protection insurance and more.
A low interest mortgage when buying a home will be important because a mortgage payment for most people represents their largest debt and monthly payment.
Mortgage interest rates in Canada have been so low for so long that buying a new home is very affordable and in some cases you may be able to buy a new home that bears a mortgage payment comparable with a monthly payment for rent.
When thinking about how much of a mortgage payment you can afford, it is important to remember that in addition to a mortgage payment you will also have a monthly payment to property taxes, hydro, gas and homeowners insurance. This can really add up and because utility costs in Ontario have increased dramatically over the past few years, it is important to get a low interest mortgage approval that gives you a low monthly mortgage payment so that if your utility costs rise, you can still afford to carry your home.
There are many different types of low interest mortgage products out there. Your mortgage interest rate will often depend on the type of mortgage product that you choose and the amount of your down payment.
Those who want to take advantage of the current historically low interest rates but may not have planned to buy a home may not have substantial savings accumulated to cover the cost of a down payment. There is no money down programs offered by many banks that enable families who don't have a down payment to be able to buy a new home.
Before buying a new home with a no money down mortgage, you must consider that this will not get you the lowest rate mortgage available. This is because in most cases, a no money down mortgage will involve a slightly higher interest rate because the bank will recover the equivalent of a 5% down payment through interest in the first 5 years of your mortgage. For example, right now National Bank's 5 year fixed mortgage interest rate is 3.49% if you have a down payment of at least 5%, whereas, their mortgage rate with no money down bears a 5 year fixed mortgage rate of 5.29%. This represents about a $300 difference in monthly payment to the homeowner.
Also, when buying a new home choosing a variable rate mortgage is often cheaper than choosing a fixed rate mortgage. Variable rate mortgages are less interest because they float with prime. The homeowners carry some risk because if interest rates rise, so will the variable rate on the mortgage. The safest bet is often to choose a low variable rate mortgage with an option to lock in. This allows you to receive the lowest interest rate with the safety net that if rates start to rise, you can lock into a higher fixed rate mortgage.
Buying a new home is often the single biggest purchase that an individual will make. For this reason it makes sense to research, prepare and establish a relationship with a local mortgage broker who can educate you on what rates are available with all the banks so that you can make the best informed decision.
Paul Mangion is the Principal Mortgage Broker and President of The Mortgage Centre Mississauga and the founder of the Tax Resolution Centre. To contact Paul call 416-204-0156, if you would like information about mortgage financing visit www.gtamortgagematters.com or if you have a tax problem, please visit www.taxresolutioncentre.ca.
Article source: https://articlebiz.comRate article
Article comments
There are no posted comments.
Related articles
- How Architects Are Shaping Sri Lanka’s Real Estate Boom
- Directing Las Vegas Homes for Sale: How Live Better in Las Vegas Guides Buyers to Success
- Understanding the Renters' Rights Bill: Key Changes and Timeline Explained
- Costs of buying property in Spain - IMS Mortgages
- Three Easy Steps to Sell Your San Antonio House Fast!
- Discover Your Dream 55+ New Construction Home Community in the Greater Tampa Bay, Florida
- Article on Mortgage Lenders and New Homes Mortgage Helpline
- The Advantages of Utilising Professional House Removals Services
- Manilva: A Rising Star in Off-Plan Property Investments
- Comparing Removals services-in-wandsworth: Your Ultimate Guide
- Port Orange -- The Perfect Twin Sister to Daytona Beach
- RE/MAX Ace Spearheads Innovative Housing Solutions in the GTA
- Should You Waive the Home Inspection Contingency? Weighing the Risks and Benefits
- Avenir: Embracing Lifestyle and Community in Palm Beach Gardens
- Serbian Real Estate: A Tidbit for Investors
- Discovering Life in Pattaya, Thailand: An In-Depth Handbook for Expatriates
- DEBUNKING HOME REPORT MYTHS
- Don't Let a Financial Hardship Force You to List Your House
- Safe Water Starts at Home
- Don’t let Missing Insulation Lead to High Energy Bills
- Property Investors Amidst Favorable Swedish Krona Rates
- How Real Estate Professionals in Houston Go Above and Beyond for Home Sellers
- Reasons to invest in real estate in Cyprus
- Top 10 criteria to select an Insurance Claim Appraiser
- Comprehensive Home Inspection Checklist for Buyer, Seller, and Homeowner
- DEBUNKING HOME REPORT MYTHS
- North Carolina Real Estate Market: Shifting Market Dynamics on the way?
- Selling Your House in Winter: Effective Tips and Strategies for Success
- Would you like to have a Free House?
- 5 Ways To Know You're Ready To Buy A Home