Selecting the right mortgage term

Selecting the mortgage term that is right for you can be a challenging proposition for even the savviest of homebuyers, as terms typically range from six months up to 10 years.

By understanding mortgage terms and what they mean in dollars and sense, you can save the most money and choose the term that is best suited to your specific needs.

The first consideration when comparing various mortgage terms is to understand that a longer term generally means a higher corresponding interest rate. And, a shorter term generally means a lower corresponding interest rate. While this generalization may lead you to believe that a shorter term is always the preferred option, this is not always the case. Sometimes there are other factors – either in the financial markets or in your own life – that you will also have to take into consideration when selecting the length of your mortgage term.

If paying your mortgage each month places you close to the financial edge of your comfort zone, you may want to opt for a longer mortgage term, such as five or 10 years, so that you can ensure that you will be able to afford your mortgage payments should interest rates increase.

By the end of a five- or 10-year mortgage term, most buyers are in a better financial situation, have a lower outstanding principal balance and, should interest rates have risen throughout the course of their term, will be able to afford higher mortgage payments.

If you are shopping for a mortgage for an investment property, you will likely want to consider choosing a longer mortgage term – depending, of course, on your overall plan. This will allow you to know that the mortgage payments on the property will be steady for a long time and enable you to more accurately project your future income from the property.

As well, if you know you will not be staying in the same home for the next five or 10 years, opting for a shorter term can save you significant fees when it comes to early payout penalties.

Choosing the right mortgage term is a unique decision for each individual. By understanding your personal financial situation and your tolerance for risk, I can assist you in choosing the mortgage term that will work best for your situation.

As always, if you have any questions about mortgage terms or your mortgage in general, I’m here to help!

Canada Mortgage Interest Rates

Recently, the real estate industry has dominated the headlines. 

 

Mark Carney, Governor of the Bank of Canada, raised warning flags about the impact of higher interest rates on those Canadians who are already stretching to carry their mortgages. 

 

There’s been coverage of the dispute between the Competition Bureau and the real estate industry over proposals that would allow greater price competition among real estate agents.

 

And there have been suggestions from within the industry that there needs to be increased professionalism among real estate agents. 

 

For many Canadians, none of these is the central issue when it comes to real estate. Rather, the key question comes down to the appreciation they can expect on the investment in their home. After all, the past decade has been a great period for homeowners. Expecting this to continue, some Canadians have stretched to buy larger houses now, before prices get away from them. Research firm Investor Economics points out that residential mortgages are at a record level, approaching $1 trillion. 

 

Click here for the full Globe and Mail article.

Dominion Lending Centres Wins Big at CMP Canadian Mortgage Awards

Dominion Lending Centres dominated the CMP Canadian Mortgage Awards on Friday, April 23rd at Toronto's Liberty Grand – walking away with five prestigious national awards!

Dominion Lending Centres took home top prizes for Mortgage Brokerage of the Year, Best Branding and Best Advertising. Meanwhile, one of our veteran broker/owners, Gary Meger, Neighbourhood Dominion Lending Centres in Barrie, ON, won Mortgage Broker of the Year. Finally, the Business Development Manager for our extensive white label Dominion Mortgage line of products, Cynthia Kramer, won Lender BDM of the Year!

“We are absolutely honoured that our industry peers and partners, as well as an esteemed panel of judges recognized Dominion Lending Centres with these incredible awards,” says Gary Mauris, President of Dominion Lending Centres.

“We will continue to provide our more than 1,700 brokers and agents across the country with value-added tools and services to ensure we remain on top, and are the company of choice for Canadian mortgage consumers,” Mauris adds.

This is the second consecutive year Dominion Lending Centres has captured the Best Branding award. Dominion Lending Centres is the only mortgage brokerage in Canada that has an advertising fund to ensure we gain access to households across the country via advertising – our main advertising vehicle being Television.

If you haven't yet noticed an upsurge in Dominion Lending Centres TV commercials, you soon will! This month and next, we have an increased presence across the country on News and Sports programming, culminating in an astounding 12.2 Million additional viewer impressions in the key demographic of consumers between the ages of 25 and 54! This is on top of the more than 240 Million viewer impressions we will make this year.

Earlier this month, six new Dominion Lending Centres commercials began airing across Canada. The key message follows a theme that interest rates are still near historic lows, and encourages viewers to contact a Dominion Lending Centres mortgage professional through our main website – www.DominionLending.ca – when purchasing a new home, or renewing or refinancing an existing mortgage.

Canada's major banks reduce mortgage rates again

Interest rates have been reduced again by 1/10th of a percentage point by each of Canada's big five banks. The new lower interest rates took effect yesterday.


The posted five-year closed mortgage rate is now 5.49 per cent annually with Royal Bank of Canada leading the way and followed by Bank of Montreal, Scotiabank, CIBC and TD Bank.

This is the second time major banks have lowered their rates this month, and follows the report from the Canadian Real Estate Association that home sales were down 6.8 per cent in July from the previous month.

 To keep informed of the latest interest rates, you can sign up for my Rate Minder email - click here - or you can also visit my website - Richmond Hill Mortgages -  to check the latest mortgages rates and use the mortgage calculators.