A mortgage is a loan used to buy a property. How much interest you pay depends on 3 factors:
- How much you borrow (the principal)
- The interest rate on the loan
- How long you take to pay it back (the amortization period)
Shop around and compare interest rates. You also may end up with a better rate if you negotiate with your lender.
Your down payment
The bigger your down payment, the smaller your mortgage and the less interest you'll pay. Aim for a down payment of at least 20% of the purchase price.
If you can’t afford to put down 20% of the purchase price, you’ll need to apply for a high-ratio mortgage. You will have to buy mortgage default insurance with this type of mortgage because there is a greater chance you may default on your mortgage payments.
Where to get a mortgage
- Mortgage companies
- Insurance companies
- Trust and loan companies
- Credit unions.
Consider a mortgage broker
A mortgage broker has access to a number of lenders and may be able to get you a better deal. And it costs you nothing – most lending institutions will pay the broker’s fee.