Whether you are considering purchasing your first home or selling your current home to purchase a larger living space, it is crucial to understand the terms and details of your mortgage. Knowing the details of your loan will ensure that you know what to expect in terms of payments, refinancing, and conditions surrounding the duration of your mortgage, allowing you to make informed financial decisions now and in the future. As a leading provider of lending solutions, the team at PHL Capital Corp knows that every mortgage is unique. That is why we have provided an overview of some important information to know for your mortgage to ensure that you understand every detail before agreeing to the terms of your loan.
Learn about the differences between variable mortgages and fixed mortgages.
4 Important Things to Know About Your Mortgage
Whether you are shopping around for mortgages or want to understand more about your current mortgage, it is crucial to understand the following elements:
1. Your Term
The mortgage term is the length of time your mortgage contract is in effect. Terms can range from a few months to 5 years or longer. At the end of each term, you must renew your mortgage if you cannot pay the remaining balance in full. Most homeowners will require multiple terms to fully repay their mortgage. The length of your mortgage term will influence your interest rate, the penalties you may need to pay if you break your mortgage contract, and how often you will need to renew your mortgage agreement with your lender.
2. The Interest Rate
The interest rate is best defined as the fee you pay to the lender for borrowing money. The higher your interest rate, the higher your mortgage payments will be. You will need to renegotiate your mortgage interest rate every time you renew your mortgage term, meaning that your mortgage payments can rise or fall in the future. Your interest rate will vary based on the length of your mortgage term, your credit history, the type of lender, and the type of interest rate you choose. Interest rates can be fixed, variable, or hybrid/combination, each with their own distinct qualities.
3. How Your Payment Amount is Calculated
Your mortgage payment amount will vary based on several factors including your amortization period, interest rate, and payment frequency. Your property taxes may also be included as part of your mortgage payment, increasing the amount you pay per week or month. If your property taxes are not included as part of your mortgage payment, you will need to ensure that you have the funds required to pay your taxes each year.
4. The Type of Mortgage You Have
Mortgages are available in a variety of types, each with their own unique qualities. Open and closed mortgages are the most common type, though portable and assumable mortgages can also be an option in certain circumstances. Open mortgages are usually more flexible than closed mortgages as they allow you to put more money towards your mortgage if you wish, but they typically feature a higher interest rate.
To learn more about our lending solutions, get in touch with the team at PHL Capital Corp. We can be reached by phone at 604-579-0847 and will be happy to answer any questions you may have regarding mortgages or our application process.