Like any other homeowners, you have 2 objectives regarding your mortgage: paying it off as quick as possible with the lowest interest rate. Because you will be locked into an agreement for usually at least 5 year terms before renewal, you want to make sure that the mortgage you agree to allows you at least a chance to fulfill these objectives.

When it comes to to mortgages, there are many different institutions that can give you one, such as banks, credit unions, and private companies through mortgage brokers. While mortgages have been competitive for the past decade with rates and other stipulations in agreements being more or less the same, there are still factors and differences you need to be conscious of when renewing or agreeing to a new one.

Below are such factors and being cognizant of them will ensuring that your mortgage is manageable and financially sensible.


1. Interest rate

The interest rate on your mortgage will arguably the most important factor when choosing which company to do business with. If your interest is low, more of your payments will go to the principal amount of the loan. Conversely, if it is higher, more will go to the interest and it will take longer to pay the amount off in full.

Before settling on a mortgage agreement, do some research and shop around for the best interest rate. This will consist of getting one rate from a lender and going to others to see what they can offer. When you get a lower rate from a lender, you can either take it to the previous ones and see if they can beat or match it, or you can settle if you think you will not be able to do any better.

2. Lender

The top three sources that potential homeowners use for mortgages are banks, credit unions, and mortgage brokers. While all of them have comparable terms, each have pros and cons. Being conscious of them when shopping for a mortgage will ensure you get the agreement that meets your needs.

When it comes to good mortgage rates, banks have favourable rates and are more likely to give you additional terms that work for you if you are already a customer. However, banks can only offer you their rates and products, leaving you little room to negotiate. Credit unions exist to serve their members and because they are a not-for-profit organization are able to be a little more flexible with customers. Drawbacks of dealing with a credit union are having to purchase other products from them to qualify for a favourable mortgage and you need to be a member.

Mortgage brokers are beneficial because they work for many different lenders and can shop around to get the exact mortgage that suits you. However, mortgages is all a broker deals in and first-time home buyers may not be as comfortable in dealing with them

3. Rate type

Unless you refinance your mortgage agreement or pay it off early, you will be making payments on it for up to 30 years depending on the terms. Therefore, you want to make sure you choose the rate that is right for you.

Mortgages consist of 2 types of interest rates: fixed and variable. Fixed rates mean that the interest rate that you agreed on is locked in and will not fluctuate at all. This is beneficial because there are no surprises as the homeowner will know what they payments will be. Variable rates mean that your interest rate is linked to the prime rate which can change depending on the credit markets. As a result, you would need to be comfortable with taking a little risk as it is possible that rates would increase at any given time.