Mortgage Choices

Mortgage Choices

What to do? Should you go fixed or variable? Open or Closed? Coldwell Banker Vantage Realty has some tips for you for your mortgage.

Fixed vs. Variable Rate Mortgages

With a fixed-rate mortgage, the interest rate is set for the term of the mortgage so that the monthly payment of principal and interest remains the same throughout the term. Regardless of whether rates move up or down, you know exactly how much your payments will be and this simplifies your personal budgeting. In a low rate climate, it is a good idea to take a longer term, fixed-rate mortgage for protection from upward fluctuations in interest rates.

Closed and Open Mortgages – What’s the Difference

An open mortgage allows you the flexibility to repay the mortgage at any time without penalty. Open mortgages are available in shorter terms, 6 months or 1 year only, and the interest rate is higher than closed mortgages as much as 1%, or more. They are normally chosen if you are thinking of selling your home, or if expecting to pay off the whole mortgage from the sale of another property, or an inheritance (that would be nice).

Amortization

The Amortization Period is the number of years it would take to repay the entire mortgage amount based on a set of fixed payments. The longer the amortization, the more interest is paid over the life of the mortgage. Therefore, when choosing the amortization period, careful planning should be done to meet your cash flows. Remember, the amortization can be easily shortened after the closing, but once registered, can only be increased with the aid of a lawyer and a few hundred extra dollars.

Contact Coldwell Banker Vantage Realty and speak with your REALTOR for some more advice about your mortgage and financial future.