In the past I had trouble paying some of my bills and it affected my credit rating. Can I still get a mortgage?

 Yes, but it may affect what you pay

 Bad credit and even bankruptcy does not disqualify you from getting a mortgage. But banks and lending institutions will ask questions and may make you pay more in interest or put on other conditions to cover the risk of taking on your spotty background.

 How much money do I need for a down payment?

 About 5%, but there are conditions

Most lenders offer mortgages with as little as 5% down, but require those mortgages to have insurance on them, the cost of which is added to your monthly payments. If you put 20% or more down, it is called a conventional mortgage, and you don't have to have insurance.

 How do I calculate my monthly mortgage costs?

 It's a combination of the interest and principal of your mortgage

Lenders calculate your monthly payments based on the amount of your mortgage, your interest rate and the amortization period. Most bank websites have mortgage calculators that will do the work for you.

 What does amortization mean?

Paying off a loan through set periodic payments.

Amortization means paying off a loan - not just interest - on a set timetable. In real estate, that means that you are paying off some of principal of the mortgage as well as the interest. The amortization period is the length of time in which you agree to pay off the mortgage. The shorter the amortization period the higher the monthly costs, but less interest overall.


 Given how low interest rates are now, should I get a fixed or variable rate mortgage?

 It's a personal choice

It comes down to how comfortable you are predicting where interest rates are going to go. Under both types you pay a set amount each month. With a fixed rate, you are paying the same amount of interest and principal each month. With a variable, your rate fluctuates with the interest rate. When it goes down more of your payment goes to the principal and when it goes up more goes to interest.

 What if interest rates go down after I sign my mortgage? Can I just go to a different bank and get the lower rate?

 No. Most lending institutions have penalties for getting out of a mortgage early

Banks and mortgage companies are counting on getting the interest from your mortgage therefore they put hefty penalties in place to stop you from breaking or even renegotiating your mortgage before the end of its term. The penalties are either a set number of months worth of interest or a calculation of the interest the bank has lost. But it is always the one that is higher.


What is an open mortgage?

 A loan you can pay off before the end of the loan period.

 An open mortgage can be repaid either in part or in full at anytime without a penalty. In contrast, with a closed mortgage you would have to pay a prepayment penalty if you want to pay it off before the end of the loan term. Closed mortgages generally have lower interest rates than open mortgages

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Irfan Amjad

Irfan Amjad

Certified Real Estate Broker
CENTURY 21 Immo-Plus
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