Mortgage Broker Calgary – Types Of Mortgages
Once a home buyer approaches a mortgage broker Calgary, they will be provided with different mortgage options. The advantage of a mortgage broker over a bank is that a broker can find mortgage Calgary that matches their client’s needs closely. Contrast this with banks, where the client has to select from a limited number of loan packages.
Once the buyer has the details on their mortgage options, they need to choose well. Here is a guide to the type of mortgages made available by best Calgary mortgage brokers.
A fixed mortgage ensures the monthly payment rate per month does not change much over the years. Fixed mortgages are almost always long term, so opt for them only if the home is not to be sold for at least 10 years. This type of loan works if the client has found a mortgage with good payment and interest rates and does not wish to alter them.
A mortgage broker Calgary will also provide details on adjustable mortgages available to the buyer. This type of mortgage has a variable payment amount. Generally, the initial years do not see a change in mortgage payment. Later, the payment rate changes to reflect change in interest rates. Most seasoned home buyers opt for an adjustable rate mortgage if they are keeping the house only short term, and plan to sell it before the variable payment rate kicks in.
A good mortgage broker Calgary will not recommend this type of loan unless there is special case present (for example, the buyer will be able to afford bigger payments later). A minimum payment mortgage is a long term loan where the buyer pays just 1 percent of the payment amount in the first 12 months. Each year, the minimum payment rate increases. However, remember that the less one pays, the more one’s debt burden remains, particularly if the minimum payment does not cover the interest rate. This kind of payment type creates no equity value.
This mortgage structure is similar to the minimum payment schedule, except that the buyer pays only the monthly interest amount, and contributes nothing toward clearing the principal. This type of payment works only if one can pay principal in large installments later.
Understanding mortgage requirements will make it easier for the buyer to work with a mortgage broker Calgary.