If you are looking to buy a home in Toronto, or any other area of your choice, and require a mortgage, there are many types of mortgages available for you. As a buyer, choosing the right mortgage is important.This choice can impact your monthly payments and the value of your investment. Here are four considerations you should keep in mind when choosing a mortgage:
- How long do you plan to stay in this home?
The length of time you will be in the home will be a significant factor in determining which loan is right for you. If you plan on staying in the home for 7 years or less, you should consider an adjustable rate loan, but if you plan on staying for 20-30 years, then a fixed rate mortgage is better for you.
- How much risk are you willing to accept
If knowing the exact amount you'll be paying each month is important for you, then a fixed rate mortgage is right for you- but this will mean a higher interest rate. If you are willing to take some risk of fluctuations in the interest rate, you may be able to receive a lower interest rate.
- How much can you afford
Once you find a home which you love, start to crunch the numbers. Ask yourself- "Can I afford the mortgage payments?" "Am I willing to cut expenses and save every month?". Make sure to choose the mortgage plan with a monthly payment which fits in your budget.
- How much cash do you have available for upfront costs?
If possible, you may want to make a larger down payment to lower your monthly payment, but if you pay a higher monthly payment, you may be able to pay back the loan at a quicker rate.
***Do keep in mind that you will have additional costs to pay. You may also need to accept a higher monthly rate to lower the down payment, or lower your monthly obligation by choosing an adjustable rate mortgage.