There is an endless supply of different types of homes available for purchase – ranging from condos to townhouses to fully-detached homes. The key is to decide what you can afford and which amenities you prefer before heading out shopping for a new home.

Your best first step is to seek the advice of a Mortgage Centre Canada Mortgage Professional and get pre-approved on a mortgage. That way, you already know what your price range is – and, therefore, which type of home you’re in the market for – before you begin shopping.

Budgeting is also an important part of preparing yourself for the purchase of a home. If you save for a down payment and up-front costs, such as closing costs and emergency reserves, much sooner, you’ll be sure to save enough to cover the many expenses facing a new homeowner, including moving, utility hook-ups, tools, maintenance supplies, window coverings, etcetera.

Once you have the money available to make your home purchase a reality, you should weigh the following options to help decide what type of home is right for you:

Condo

A condo makes a great first home because it typically costs less than a townhouse or a detached home, which translates into a smaller down payment. But there are, however, monthly maintenance fees you must take into consideration when budgeting for a condo.

Condos are also ideal for those who do not want to maintain a lawn or worry about clearing snow away from walkways and driveways.

Townhouse

If the condo life is not your forte and you’re not looking for a big yard to maintain, a townhouse may be your best home purchase option.

A townhouse costs less than a fully-detached home and results in cheaper property taxes as well.

Many townhouses also come with monthly maintenance fees unless they are freehold townhouses. In situations where you pay a monthly fee, however, you won’t have to worry about outdoor maintenance or snow removal.

Detached Home

If it’s privacy you’re seeking as well as a larger yard, a detached home is your ideal choice. Still, prices can vary drastically based on such variables as whether you’re seeking a spot in the city, a place in the suburbs or a more rural location.

Other Considerations

The size of the home and property (if you decide not to opt for a condo) are also important things to consider before you head out shopping. While everyone has their dream home in mind, this is not always a practical purchase choice, especially if this is your first home purchase.

When it comes to location, think about in which area or neighbourhood you’d like to make your purchase, and which home features are absolutely essential – including what you can live without and what aspects are entirely out of the question.

Take a look at real estate ads for the area(s) you’re interested in to see what’s on the market and the price ranges. Also drive around a few neighbourhoods and see what’s for sale or visit Open Houses. This can help crystallize what you want or don’t want in a home. By making your first purchase a modest and affordable ‘starter’ home, you will be putting money towards a mortgage that will build equity in that home. And once you’ve paid down a significant portion of that first home’s mortgage, you will then have more money to put towards an upgrade into your dream home.

The decision to choose a fixed or variable rate is not always an easy one. It should depend on your tolerance for risk as well as your ability to withstand increases in mortgage payments. You can sometimes expect a financial reward for going with the variable rate, although the precise magnitude will ebb and flow depending on the economic environment.

Fixed rate mortgages often appeal to clients who want stability in their payments, manage a tight monthly budget, or are generally more conservative. For example, young couples with large mortgages relative to their income might be better off opting for the peace of mind that a fixed-rate brings.

A variable rate mortgage often allows the borrower to take advantage of lower rates — the interest rate is calculated on an ongoing basis at a lenders’ prime rate minus a set percentage. For example, if the prime mortgage rate is 5.5 percent, the holder of a prime minus 0.5 percent mortgage would pay a 5.00 percent variable interest rate. As a consumer, the best option is to have a candid discussion with your mortgage professional to ensure you have a full understanding of the risks and rewards of each type of mortgage.

Mortgages in Canada are generally amortized between 25 and 35 year terms. While this seems a long time, it does not have to take anyone that long to pay off their mortgage if they choose to do so in a shorter period of time.

With a little bit of thinking ahead, and a small bit of sacrifice, most people can manage to pay off their mortgage in a much shorter period of time by taking positive steps such as:

• Making mortgage payments each week, or even every other week. Both options lower your interest paid over the term of your mortgage and can result in the equivalent of an extra month’s mortgage payment each year. Paying your mortgage in this way can take your mortgage from 25 years down to 21.
• When your income increases, increase the amount of your mortgage payments. Let’s say you get a 5% raise each year at work. If you put that extra 5% of your income into your mortgage, your mortgage balance will drop much faster without feeling like you are changing your spending habits.
• Mortgage lenders will also allow you to make extra payments on your mortgage balance each year. Just about everyone finds themselves with money they were not expecting at some point or another. Maybe you inherited some money from a distant relative or you received a nice holiday bonus at work. Apply this money to your mortgage lender as a lump-sum payment towards your mortgage and watch the results.

By applying these strategies consistently over time, you will save money, pay less interest and pay off your mortgage years earlier!

There are generally two ways to get a mortgage in Canada: From a bank, or from a licensed mortgage professional.

While a bank only offers the products from their particular institution, licensed mortgage professionals send millions of dollars in mortgage business each year to Canada’s largest banks, credit unions, and trust companies … offering their clients more choice, and access to hundreds of mortgage products!

As a result, clients benefit from the trust, confidence, and security of knowing they are getting the best mortgage for their needs.

Mortgage professionals work for you, and not the banks; therefore, they work in your best interest. From the first consultation to the signing of your mortgage, their services are free. A fee is charged only for the most challenging credit solutions, and it’s especially under those circumstances that a mortgage professional can do for you what your bank cannot. Whether you’re purchasing a home for the first time, taking out equity from your home for investment or pleasure, or your current mortgage is simply up for renewal, it’s important that you are making an educated buying decision with professional unbiased advice.

Applying for a secured loan, for paying off a different loan secured against the same home, condo, or cottage is known as mortgage refinancing.

New loan at a more favorable rate of interest can be availed if the original loan having fixed interest rate mortgage has been declined considerably. Usually refinancing is done, when you have a mortgage on your home and you apply for a second loan to pay off the first one. When the mortgagee is having a decision to refinance the mortgage, he should first analyze that the amount saved on interest balances the amount which has to be paid as a fees during refinancing.

Mortgage refinancing can give access to extra cash, while at the same time lowering monthly mortgage payment. Refinancing the mortgage will give the advantage of the equity to be at home and reduces the monthly payment of mortgage. The interest rates are influenced by credit rating and the amount of down payment by the mortgagee. The most important factor is the prevailing rate at that current time.

By having your mortgage refinanced when interest rates are lower, higher interest rate can be exchanged for lower one; this will lower the monthly payments and will be beneficial for the mortgagee.

The term of the mortgage can be shortened with the help of refinancing. If the rate of refinancing is lower, but the monthly payments made by the mortgagee are same, then more of the payment will be going towards satisfying the principal amount and this will in turn reduces the time duration of mortgage as the loan amount will be paid.

Cash out refinancing is another option available to the mortgagee. In this type of refinancing the mortgagee can refinance for an amount higher then the principal amount, and can take the balance amount as cash. This amount can be used for remodeling the house, paying off high interest rate bills or meeting the expenses of home member’s education.