Make sure your mortgage needs fit in with the rest of your financial priorities, say specialists in this field. This is an important consideration whether you are buying a new home or refinancing property you already own.
Depending on your personal situation, you may want a mortgage with more flexibility or more security. When making your choice, say BMO adviseors, consider the following:
The Amortization Period - The shorter the life of the mortgage, the lower the overall cost. Consider choosing a 25 year amortization rather than a 30 year amortization so you can build equity in your home sooner and save on interest, which can ultimately be put towards your savings and other long term gold, such as retirement.
Fixed versus Variable Rate - Variable rate mortgages have been a winning strategy over the long term. However, fixed rate mortgages - currently at historic lows - provide the peace of mind of insulating you against rate increase along with the certainty of knowing how much of your mortagage you will have paid down at the end of your term.
Stress-test your payments - Use a mortgage payment based on a higher rate to stress-test your budget; this way, you will have peace-of-mind knowing that you can afford a sudden increase in interest rates. Also, ensuring your total housing costs, including mortgage payments, property taxes and heating costs do not consume more than one third of household income, provides a good rule of thumb for ongoing affordability. Lastly, seek our a financal professional for all your questions. With the right advice, you will be able to choose the mortgage that's right for you.
From Resale Home & Condo Guide