Tip Of The Iceberg The Truth About Getting The Best Mortgage
When you are searching for a self-employed mortgage, a great interest rate is only the tip of the iceberg. You might secure a super low interest rate and be ready to celebrate, but the payment terms can turn those would-be savings into certain grief. The truth about getting the best mortgages in Edmonton lies in a combination of great interest rates and payment terms and conditions that work best to meet your goals.
Understanding Payment Terms
Although there are many terms and conditions involved when securing mortgages in Edmonton, we're going to focus on just two:
- Closed Term Mortgage- this product may offer a lower interest rate than others, but reduces your chance to save money in the long run. If you decide to pay off your mortgage before the term, you will pay an often heavy penalty.
- Pre-Payment Condition- this is a clause that is designed to allow you to make pre-payments without penalties, meaning you can pay off your mortgage faster and save considerable interest.
What a Pre-Payment Without Penalty Clause Entails
Just as the name implies, this mortgage product allows you to make advance payments on your mortgage without incurring penalties. Since extra payments are applied directly to your principal balance, you pay interest on a lower amount every time you make an additional payment, but not all pre-payment clauses are the same. Most lenders will have a set of terms surrounding pre-payments including the amount you can pre-pay annually and how often these payments can be made.
Finding Money for Extra Payments
You might think we're crazy to suggest you have enough "extra" money to make any difference on mortgage pre-payments, but you would be surprised how fast savings can accumulate. An extra yearly payment of $1000 can knock five years off your mortgage, based on $100,000.00 amortized over 25 years at an interest rate of 3 percent. If that sounds impossible, how does $20 a week sound? That's a few less coffees or one less restaurant lunch per week to be mortgage-free 260 weeks sooner than you planned.
We know you're chomping at the bit to see how fast the best mortgages in Edmonton can save you money so contact us today to get yourself a better mortgage. At Dominion Lending Centres, we have the knowledge and experience as mortgage brokers to answer all of your questions and get you the best mortgage possible.Request Mortgage Info