What is the right mortgage for you?
Probably for the majority of us the most common types of mortgages available in Oakville are fixed or variable rate mortgages, but there are various others and getting to know them could change your home buying scenario!
Taking a look first at the fixed rate mortgage, in which the interest rate is set and secured for the mortgage term. Lenders frequently do offer various prepayment options which allow for a quicker repayment of the agreement, as well as for partial or full repayment of the mortgage amount.
On the other hand, the variable rate mortgages and adjustable rate mortgages differ from a fixed rate mortgage by the fact that the mortgage rate could change during the mortgage term. It’s usual for these mortgage types to be originally set up similar to a standard loan, and based on the current interest rate. However, the mortgage is subject to review at determined intervals, whereby should the market interest rate have changed the lender will then either adjust the repayment amount, amortization period, or a combination of both.
The Home Equity Lines of Credit (HELOC) option
In comparison to the foregoing fixed and variable options, the home equity line of credit (HELOC) is effectively a revolving line of credit which is secured by your home. Your Oakville mortgage broker will explain in detail how you can borrow money up to a determined credit limit. This sum is generally related to a percentage value or equity in your home.
The HELOC option and you borrowing on the equity in your home depends upon the difference in the value of your home and the remaining unpaid balance of a current mortgage. A further option is available to you by being able to commit to a HELOC plan instead of a traditional mortgage. However, this is where your Oakville mortgage broker can assist you because to further complicate the issue, these lending facilities may be divided and repaid in different ways. For example, a fixed interest rate segment and a variable interest rate segment!
The relative ease and convenience of borrowing with HELOC can be a temptation to commit to a larger loan than you can comfortably afford. With the help of a qualified mortgage advisor such as Mortgage Guys determine the repayments will still be affordable, in the event of future interest rates and correspondingly, repayment increases.