Frequently Asked Questions & Answers

Thinking of a mortgage? Feeling a tad overwhelmed? Well, don’t worry – mortgages are a complex form of loan, coming in many shapes, sizes and with different options and features.

Have a look at frequently asked questions & answers to understand more.

This is one of the most commonly heard questions – just what exactly is the difference between a fixed rate and variable rate mortgage?
For fixed rate mortgages, the interest rate is locked in for a pre-set amount of time – between half a year to a decade. The benefit of fixed rate mortgages is that you have complete knowledge of the amount you will be paying for your mortgage term.
And then there’s variable rate mortgages.
This type of mortgage involves payments that are fixed for a specific period, usually a year or two. During this time, while your payment remains the same the interest rate on the mortgage may go up and down as market rates shift and fluctuate. What this means for your payment is this: if interest rates take a nose dive, then more of your payment is used to reduce the loan principal, lowering your total costs. Meanwhile, if rates shoot upwards, then a bigger chunk of your monthly payment is used to pay for the interest, adding to your mortgage cost.
Just because your mortgage has a set life span doesn’t mean you can’t pay it off ahead of time. Remember, the longer a mortgage runs the more it accrues in interest payments, so wiping out the loan out early can result in significant savings. And thankfully it’s not impossible to do.

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