The Best Type of Mortgage for Mississauga Homes
- Variable or fixed?
- Interest rates?
- Conditions and terms?
Oh my, things can get especially confusing when you don't know the words and everything they stand for!
Your mortgage broker or loan advisor will sit down and discuss all of the options you have available so that you can make an informed decision yourself about the right path to choose. There is one thing, however, that you need to make sure gets included in your mortgage package and that is the ability to be able to make extra payments on your loan during the mortgage term.
Why is this so important?
A lot of the money that you are going to be paying on your home is going to be in the form of interest, especially at the beginning. When you are able to come up with extra payments on top of the minimum required they will be helping to pay off the principle. This can end up saving you thousands, yes thousands, of dollars in interest charges.
Consider this …
The minimum amount that you agree upon now for your monthly payments is what you feel you can comfortably pay at this moment in time. Unexpected things can happen in the future though and a financial windfall or a few of them could give you some extra money to put towards your mortgage. Sometimes they can be in the form of an inheritance, a tax refund or even a lottery winning! Positive things can happen with a financial aspect to them that can give you the chance to put some extra aside for your home loan.
It is crucial that your mortgage have the option to make extra payments. With most mortgage contracts they do allow for additional sums to be added on top of the minimum required and you'll be allowed to pay 10% up to 25% per year without being penalized for it.
Even small amounts add up
If you find that you have an extra $40 or $50 that you can add to the monthly payment plan it would be in your best interest to start adding these small payments. It doesn't take long for these small extras to start snowballing into a larger sum that can make an extreme difference in the amount of overall interest you'll end up paying on your home.
To give you an example, if you have a $200,000 mortgage and are paying an interest rate of 6% on it and making monthly payments of $1,280, by adding an extra payment every year you'll end up saving about $35,000 in interest. This is a lot of money!
You'll also pay off your mortgage faster so that you can end up having that final mortgage pay-off party sooner. When it comes to Mississauga homes for sale, make sure that you find a mortgage that will allow you to make extra payments because you really can't be sure what potential financial windfalls are going to be heading your way in the future.