Most, if not all, people who purchase real estate get a mortgage. However, it is not a simple process. You may even require the assistance of a mortgage lawyer in Edmonton to help you decide. The reason is that there are financing options you need to understand so you can come up with a decision that is suitable for your needs and situation.
Weighing Your Options
Among the financing options that you can choose from are the fixed rate and variable rate mortgages. Both types of loans have advantages and disadvantages. Weigh them before coming up with a decision.
As the name suggests, this type of mortgage offers a fixed interest rate at the beginning of the term. It is not subject to any changes during the mortgage term. It may be best for someone who wants a set amount for monthly payments. However, the interest rate may be higher for this loan. One advantage of this is it has a lower long-term risk.
For example, you have chosen a five-year term with a fixed rate. All of the payments you have to make would depend on that rate for the full five years.
- Variable Rate
Under this type, you can have a fixed mortgage payment, but it can also change once the interest rate moves. The lender will offer you a loan at a prime rate, which is the interest rate the bank has set, plus or minus a percentage. The interest rate you have to pay moves along with the prime rate.
One advantage of this type is it usually comes with lower initial interest rates and associated penalties. However, it comes with a higher risk.
Choosing A Mortgage Type
Both mortgage types have pros and cons. The best way to decide is to have the proper information. You can compare interest rates and discuss it with your lender. Having a mortgage lawyer in Edmonton can also help you answer your queries and take care of your paperwork.
You may want to contact a Mortgage Broker to answer your mortgage questions. They have experience with all types of borrowing situations and access to all types of lenders to help find a mortgage solution for you. Contact http://phdmortgages.com/ for answers to your questions.