Banks can decline first time home buyers for many reasons. Complications with your income, credit history, down payment or employment status could greatly decrease your chances to get a mortgage from them.
Serving Ontario and the GTA for almost 20 years, Canadalend has become one of the largest and most used brokerages in the province. We have access to many financial institutions and private lenders that want to work with you – not against you – to help make that giant leap into homeownership.
There are two options that lenders use to calculate interest rates – Fixed and Variable. When choosing a first mortgage it is important to take into consideration what each of these can do for you.
A Fixed Rate would keep the interest portion of your payments the same over the term of your mortgage whereas with Variable rates the interest portion fluctuates with the market.
For example, when interest rates are low, more of your monthly payment would go towards paying off the principal (the actual mortgage). If the rates were to then rise, more of your payment would slide towards the interest portion of the mortgage loan.
Amortization is the length of time it takes for you to pay off the full amount of your mortgage.
In order to pay off your mortgage, you must agree on what are called Mortgage Terms. Everything your mortgage contract outlines, including rates, type and payments, make up your Mortgage Terms.
These terms need to be renewed, so it usually takes multiple terms to fulfill your amortization agreement.
Below is an example of the Amortization of a first mortgage of $300,000 with a constant interest rate of 4%.
Amortization Example | ||
Amortization | Monthly Payment | Principal Paid |
25 Years | $1,578.00 | $38,838 |
20 Years | $1,813.00 | $54,384 |
15 Years | $2,214.00 | $80,973 |
10 Years | $3,033.00 | $135,196 |
There are two types of mortgages that you can get – Open and Closed.
With an Open mortgage, you can pay extra money (without any penalties) in order to pay off the balance of your mortgage quicker, as well as the ability to renegotiate your Term before it is up.
A Closed mortgage limits the amount of extra money you can pay on top of your usual payments (without a penalty) but is great for budgeting. Your payment never changes, and it is usually at a better interest rate than an Open mortgage.
If this sounds complicated don’t worry, the experts at Canadalend can explain it all – in simple and clear terms – over a free consultation.
| Client’s Current Mortgage | Canadalend.com Mortgage | Savings | |
|---|---|---|---|
| First Mortgage Amount | $500,000 | $500,000 | |
| Interest Rate | 4.99% | 2.95% | |
| Term (Years) | 5 | 5 | |
| Amortization Period (Years) | 25 | 25 | |
| Monthly Payment | $2,905.18 | $2,352.42 | $552.76 |
| Remaining Term (Months) | 24 | 60 | |
| Total Remaining Payments for 24 months | $69,724.32 | $56,458.08 | $13,266.24 |
*For representation purposes only. Rates subject to change without notice. This is an example of what we can do for you. New payment schedule based on a first mortgage of 2.95% on a 30 year amortization, 5 year variable. Terms and conditions apply. Subject to the verification of the information on the credit application and review of the credit worthiness of the borrower. O.A.C some conditions apply.