Mortgage Options

Hybrid mortgages

Many first-time home buyers opt for a 5-year fixed rate since their finances don’t have much room for interest risk. However, if you have good credit, are financially stable, and are able to save at least 5 percent of your monthly income, consider choosing a shorter fixed term and variable rates.

If you choose variable, find an option that keeps your payment the same, even with interest rate fluctuations. This will give you peace of mind when the rates begin to climb.

If you can’t decide between the two options, you should consider a hybrid mortgage. It allows you to split your mortgage into two different rates (perhaps half variable and half fixed) so you can take advantage of lower rates while cushioning yourself when the rates climb.

Portability options

For home buyers looking for a home where they intend to settle for more than five years, then portability, or the ability to move their mortgage to a new real estate without penalty, is not a top concern. If there is a chance that you will relocate after a couple of years, you should find the best portability options that provide you with:

• The best rates from your lender in the event that you need to add money to the mortgage, such as when upgrading to a more costly home
• More time to close your new mortgage after selling your old home, preferably more than 60 days

Low-frill mortgages

If you’re not considering making huge prepayments, refinancing, or moving in the next five years, you should consider low-frill mortgages. This option gives you a cheaper rate in exchange for bigger prepayment charges (penalties), smaller prepayment privileges, and in some cases, a restriction on refinancing with other lenders until your renewal date has passed.

Talk to our experienced Mortgage Agents and Brokers

When approaching your bank for a real estate mortgage in Toronto, you will be limited to the mortgage products that are specific to that bank, yet there may be many other, better suited options for you. No matter how big you think your bank is, it is always smart to involve an experienced mortgage broker, like a member of the team at Northwood Mortgage, to help you get the best mortgage deal in Toronto.