Much has been made of the historically low mortgage rates currently driving home sales across Canada, but when it comes to finding the perfect home loans, rates are only one part of the equation.
Advertisements for the best mortgage rates are everywhere, but there is less information readily available regarding mortgage terms, according to mortgage expert Robert McLister. Writing in The Globe and Mail, McLister points out that the length of a mortgage will ultimately determine how much interest homebuyers pay.
Choosing between a longer, fixed-rate mortgage and a shorter, variable-rate mortgage is an important decision, and the pros and cons should be weighed carefully, according to McLister. A lengthier mortgage term provides certainty and stability for those whose financial situations might change, while a shorter mortgage could be beneficial to those who are in a position to pay off large chunks of it within the first few years or who are planning to move soon.
The Canadian Imperial Bank of Commerce recently conducted a survey of Canadian homeowners. The bank found that more than half of those who were able to pay off their mortgages by the age of 48 made large lump sum payments toward their mortgages every year they were able to, given their financial situation.