Competition = Low Mortgage Rates

Things to Consider When Purchasing a Re-Sale

If you decide not to build brand new and have opted for purchasing a re-sale, it is extremely important to carefully assess the following pros and cons before purchasing:

• You usually get a lower price due to wear and tear
• You get the benefit of upgrades (finished basement, pool, etc.) at a depreciated price
• Your neighborhood is generally established and amenities are in place

• Others have lived in the home
• There is no warranty for repairs required by law (unless it is a condition of purchase)
• The décor might require changes and can be costly or time consuming

Choosing the Right Type of Home

After you have decided that home ownership is right for you, it is important to fully understand which type of home will best suit your needs.

Not all individuals or families belong in a three bedroom, split-level house in the suburbs. Some might prefer condo or town home living for added convenience, so it is important to assess your needs fully before deciding on the type of property to purchase.

Each type of housing will have pros and cons, so weigh them all carefully and make an informed decision. If you are finding the choices overwhelming, our professional mortgage brokers at Alberta Equity Mortgages can offer advice about the different kinds of housing available and steer you in the right direction.

Fixed Rate vs. Variable Rate

FIXED RATE
A "fixed rate" mortgage simply means that the interest rate on the money you borrow stays at a locked or "fixed" rate. This means that your interest rate is not subject to change and the rate at which you pay back your loan is always the same. There are some advantages to having a fixed rate when you consider the nature of the inflation rate. The value of your home should continue to increase year to year while the principle amount will continue to decrease.

VARIABLE RATE
A "variable rate" mortgage or below prime rate mortgage is a mortgage where the interest rate is subject to change depending on the prime rate. Most of these mortgage products are based on a formula using the prime interest rate less a discount. For example, if you choose a below prime rate mortgage with a rate of Prime minus 0.5% then your rate would be calculated at any given time using this formula. So if prime were 4% then the interest rate on your mortgage would be 3.5%.

Open Mortgage vs. Closed Mortgage

OPEN MORTGAGE
An "open mortgage" can be paid back in full at any time prior to maturity, without penalty. You will find most variable rate mortgages with deep discounts are closed for a pre-determined time. After this time frame the mortgage can become an open mortgage. A qualified mortgage agent can clarify the differences for you.

CLOSED MORTGAGE
A "closed mortgage" can not be terminated or paid out before the end of the term without penalty. A "closed mortgage" provides payment stability but penalizes a mortgager who wishes to terminate the mortgage before the end of the term. Terms can be for six months, one to five years, or for seven, ten, fifteen, eighteen and twenty-five years, with the five year term being the most common. Interest rates generally rise with the length of the mortgage term. Most fixed rate mortgages are closed.

Buying Your First Home

One of the most important investments for anyone is the purchase of a home.

There are many important questions that must be answered when it comes to buying your first home. Many new buyers do not understand the home buying process and may become anxious when it comes to making an offer on a property. Alberta Equity is well versed in the first home purchase process, providing information for approvals and walking through the process of completing your first home purchase. Learn More