Terms & Rates

Terms

The term of a mortgage is the length of time a lender will loan mortgage funds to a borrower. This duration can be from six months toten years, five years being the most common. Generally, the shorter the duration of a mortgage term, the lower the interest rate, and the less it costs to borrow the money. At the end of each term, you will either pay off the balance owing or renegotiate the mortgage for another term until the entire mortgage is paid back.

Rates

An interest rate is the amount of interest charged on a monthly loan payment, expressed as a percentage. It is based either on the rate the Bank of Canada charges to lend money to money lenders or on bond yields. Interest rates are generally lower if you borrow money for a short period of time and higher if you borrow the money for a longer period of time.

Short Term

Short Term agreements or mortgage contracts are usually for two years or less. Short term mortgages usually offer a lower cost of borrowing (interest rate) than a longer term. People who believe that interest rates are currently higher than they will be in the future generally choose a short term mortgage. They anticipate that interest rates will be lower at the time of renewal.

Long Term

Long term agreements are generally for three years or more. Long term mortgages usually cost a bit more than short term mortgages, so the interest rate will be higher. A higher rate appeals to borrowers who value the stability and predictability of fixed expenses over a set period of time. A stable mortgage payment is easier to budget and offers peace of mind.

It can take a long time to completely pay off your mortgage – usually from 15 to 30 years. The process of fully paying off your loan by installments of principal and interest over a definite period of time is called amortization.

There are many ways of repaying your mortgage. Some people find comfort in a pre-determined fixed rate – it helps them budget and plan for other things in their life. Some people desire more flexibility in their repayment – their circumstances might include fluctuations in their cash flow, and they may want to make larger payments whenever possible. Different kinds of mortgages appeal to the different types of borrowers. At Invis-Feisal & Associates, we can help you decide what is best for you.

Call us toll-free at 1.866.576.1412 to learn about current rate trends
and which financing option is best for you.

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