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Top Questions to Ask when Discussing Mortgage

13 July 2012

Looking for mortgage brokers in Ontario that can help you obtain the home loan you need? Here are a few questions to ask to make sure you’re getting the best deal for you, and that you’re working with the right people.

What’s the best type of mortgage loan for me?
No one can tell you the answer to this question without taking an in-depth look at your current loan needs and financial situation; nor without talking to you about what your possible future needs might be. Your broker should explain to you all the different types of loans that are available, including fixed-rate loans, adjustable-rate loans, and interest-only loans.

What is the annual percentage rate and rate of interest?
Many homeowners and homebuyers think that the annual percentage rate (APR) and interest rate are the same thing; but in fact, they are different. The APR is actually higher than the interest rate, and includes the costs that will accumulate over the total life of the loan. The APR will include costs such as loan transaction costs, fees, and the interest rate.

What are the other costs that I’ll have to pay?
In addition to the interest and APR that you’ll have to pay, there may be other fees associated with your Toronto mortgage, and your broker should explain all of these. Property appraisals, brokerage fees, lender’s title policy, pest inspection reports, escrow, recording fees, and taxes are just a few of the additional costs that can accompany a mortgage.

What prepayment penalties will accompany my mortgage?
Just about every mortgage in Canada will have a prepayment penalty attached to it, and these fees will vary depending on the lender that you choose. Ask your broker about the prepayment fees that are associated with your mortgage and that you make sure you can afford them. Often they can be as much as several month’s interest on the loan, and depending on the amount, they can be quite costly.

Getting a mortgage can be such an exciting time, but it can also be a confusing one. There’s no doubt that you have lots of questions, and the ones listed above most likely are just a few. Be sure to write down all the questions you have for your broker, and to ask any that come up during your conversation with them. It’s the only right way to get the answers, and the mortgage, that you need.

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