Understanding Different Types of Mortgages: Helpful Tips for New Canadians
As a newcomer to Canada, you may be considering buying a home in your new country. It may be exciting to think about but where do you start?
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Understanding the various types of mortgages may help you make informed decisions. This article can help provide you with some helpful guidance, covering the basics, different mortgage types, and tips for a smoother mortgage experience.
Getting to Know Some of the Basics[1]
What is a Mortgage?
A mortgage is a loan that is a common way to finance the purchase of a home. It allows you to acquire the home without having to have saved the full purchase price in cash. It’s a promise you make to a bank or a lender for a certain number of years, to make consistent payments in order to pay back the loan, where the home serves as the security for the loan. A mortgage has an amortization period and regular payments that pay back both the principal (the amount of money you are borrowing for the mortgage) and interest charged on that principal. Amortization period is the length of time it would take to pay off the mortgage assuming there are no changes to the regular payment amount or interest rate.
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What You May Want to Consider When Getting a Mortgage
Several factors may be considered when selecting a mortgage. These may include:
the interest rate offered by your mortgage lender,
the term of the loan,
the type of mortgage, and
prepayment privileges
Understanding your Mortgage Term vs. the Amortization Period
It may be helpful to understand how your “mortgage term” is different from the “amortization period.”
A mortgage term is the length of time you’re committed to an interest rate with your mortgage lender. At every renewal, you may have a different interest rate.
This means your interest rate may not be the same for the entire amortization period. Many people choose an amortization period of 25 years. The longer the amortization period, the more interest you will pay over the life of the mortgage, but your regular payments may be lower.
How Mortgage Payments are Calculated
Mortgage payments are usually calculated based on the principal amount/balance, the interest rate, the amortization period, and the payment frequency. They typically include principal and interest components.
Understanding Prepayment Privileges[2]
Prepayment is different from a regular payment. A prepayment is on top of your regular scheduled mortgage payments and can be in the form of lump sum amounts or increasing your regular payments by a certain percentage. Prepayments pay down your mortgage faster and reduce your amortization period. As a result, they reduces the amount of interest you pay for the life of the mortgage.
Prepayment privilege is the maximum amount of prepayment you can do without paying a prepayment charge, and it will vary by lender and mortgage type.
Paying your mortgage in full before the maturity date is often referred to as “breaking your mortgage.” If you have a variable interest rate and closed mortgage, your prepayment charge is typically 3 months of interest. If you have a fixed rate and closed mortgage, your prepayment charge is typically the greater of a) three months’ worth of interest or b) the interest rate differential (IRD) amount. Depending on how much time is left on your mortgage term, the IRD can be a large amount, making it critical you speak with your mortgage specialists to understand the terms of your mortgage before you pay it out. Learn more about breaking your mortgage[3].
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How to Make Your First Mortgage Experience in Canada Easier
Consider Choosing Flexibility
Selecting a mortgage with flexible payment options may help you manage your finances more effectively. For example, TD Mortgages allow you to increase your payments. In addition, TD allows you to make lump sum prepayments up to 15% of the principal amount on a closed mortgage annually, or 100% on an open mortgage without prepayment charges. If you need to take an emergency break from your mortgage payments, payment pause allows you to request to skip the equivalent of one monthly payment with TD’s approval. Be aware that interest will continue to accrue during a payment pause. These features could help make it easier to pay off the mortgage faster or help you prepare for the unexpected.
Choosing a Mortgage That Might Be Right for You[1]
Selecting the right mortgage involves understanding your financial situation and future plans. You may wish to consult with a mortgage specialist who may be able to help you evaluate the different types of mortgages and their potential impacts on your finances.
Types of Mortgage Terms Available at TD
TD Fixed Interest Rate Mortgage: This type of mortgage term maintains the same interest rate throughout the term of the mortgage. If you prefer to have stability in your mortgage interest rate, this may be a good option for you. You can choose from a different term lengths ranging from 6 months to 10 years.
Pros:
Your mortgage payments stay the same throughout the term providing stability and predictability.
You’ll have protection against interest rate increases during the term.
Cons:
If interest rates decrease during your term, your mortgage payments do not decrease.
TD Variable Interest Rate Mortgage: This type of mortgage term has an interest rate that may fluctuate up or down throughout the term of your mortgage loan as the TD Mortgage Prime Rate changes. At TD, the variable interest rate mortgage has fixed payments during the 5 year term. Your principal and interest rate payments will stay the same for the term, but if the TD Mortgage Prime Rate goes down, more of your payment will go towards the principal. If the TD Mortgage Prime Rate goes up, more will go towards the interest. At a certain point, you may be required to make adjustments. In contrast, some other lenders offer adjustable variable interest rate mortgages where the regular mortgage payment will increase if the base rate increases.
Pros:
You will pay less interest if the interest rates decrease.
Cons:
You will pay more interest if the interest rates rise.
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How Mortgage Choices May Affect One’s Future
Ultimately, the features of your mortgage may provide flexibility in the future if your financial situation changes. For example, you may be able to choose from open and closed prepayment options. In all cases, it may be best to consult your mortgage specialist.
Understanding Different Types of Prepayment Options[4]
Another important decision is whether to go with an open or closed prepayment term. The major difference between open and closed terms is the ability to make extra mortgage payments or payout your mortgage.
Here’s a breakdown of some of their pros and cons that may help simplify your decision-making process.
Open Mortgage: Whether you have a fixed or variable interest rate, this offers flexibility to repay your mortgage principal amount at any time without any prepayment charges.
Pros:
Cons:
Typically has a higher interest rate compared to a closed mortgage with the same term length because of the added prepayment flexibility.
Closed Mortgage: Prepayments are permitted but prepayment charges will apply if you exceed the prepayment privilege which varies by mortgage lender.
Pros:
Usually has a lower rate compared to an open mortgage with the same term length.
Cons:
Limited flexibility in making prepayments.
Charges if you exceed the permitted prepayment privileges.
By understanding the different types of mortgages and their features, new Canadians like you can make more informed decisions in pursuit of your financial goals. You may wish to take the time to research and seek advice from your mortgage specialist. That way, you can prepare for your journey to homeownership in Canada.
For personalized guidance on your mortgage options, request a call today from a TD Mortgage Specialist.
Why Choose TD?
150 years helping Canadians:
TD has a proud history of delivering financial solutions to Canadians for more than 150 years. TD also brings a century of experience helping newcomers navigate the unique challenges of the Canadian banking system.
With over a thousand branches, a reputation for excellence in financial services, and the ability to also serve you in more than 80 different languages, TD has become one of the largest and most trusted banks in Canada, now serving 16 million Canadians.
TD offers online support and resources of interest to newcomers on topics such as banking basics, moving to Canada, credit score essentials, and more. TD is open longer hours for your convenience and has thousands of ATMs across Canada to help you take care of your everyday banking needs quickly and easily.
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Learn more about TD New to Canada Banking Package today. Book an appointment to talk with a TD Personal Banking Associate about the TD New to Canada Banking Package. You can book online right away, or visit the TD website to learn more.
Legal Disclaimer:
Information provided by TD Bank Group and other sources in this article is believed to be accurate and reliable when placed on this site, but we cannot guarantee it is accurate or complete or current at all times. Information in this article is for informational purposes only and is not intended to provide financial, legal, accounting, or tax advice, and should not be relied upon in that regard. This information is not to be construed as a solicitation to buy. Products and services of the TD Bank Group are only offered in jurisdictions where they may be lawfully offered for sale. All products and services are subject to the terms of the applicable agreement. The information in this article is subject to change without notice.
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[1] https://www.canada.ca/en/financial-consumer-agency/services/mortgages/choose-mortgage.html
[2] https://www.canada.ca/en/financial-consumer-agency/services/mortgages/reduce-prepayment-penalties.html
[3] https://www.td.com/ca/en/personal-banking/products/mortgages/what-happens-break-mortgage-penalty
[4] https://stories.td.com/ca/en/article/mortgage-process-101
Understanding Different Types of Mortgages: Helpful Tips for New Canadians
Luis Diaz was fouled in Liverpool clash. (Photo by Eric Alonso/Getty Images)
Liverpool were 1-0 winners over Girona in the Champions League on Tuesday night and former Reds star Steve McManaman feels his old club got a little lucky. The Merseyside club arrived into the clash in Spain having won all five of their Champions League matches and Arne Slot’s men kept up their 100 per cent record with the victory.Girona caused Liverpool a lot of problems in the first half and the Reds boss can thank his goalkeeper Alisson Becker for keeping the home side out. The Merseyside outfit were much better in the second 45 minutes and it was during this half that the biggest talking point of the game emerged.Donny van de Beek would commit a clumsy challenge on Luis Diaz – who has recently been linked with a move away from Anfield – in the Girona box when the Dutch midfielder barely stepped on the winger’s heel.The referee viewed the coming together as a foul after being sent to the VAR monitor, resulting in Mohamed Salah converting the spot-kick.The incident sparked a lot of debate on social media and former Liverpool star Steve McManaman felt his old club were lucky to get the decision.
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Steve McManaman on the Liverpool penalty incident
Liverpool star Luis Diaz earned Liverpool a penalty. (Photo by Eric Alonso/Getty Images)Speaking after the match, McManaman stated that he thought the penalty was harsh and compared it to the unpunished fouls that often happen during corners and free-kicks.“You expect the midfielders to go to close down and if you stand on an inch of his heel, it is very unfortunate,” the pundit said on TNT Sports. “With all respect, it is a contact game. We see a lot more contact at corners and free-kicks that go unmentioned so I don’t think it was a penalty regardless of the result.”
“He’s given the referee an opportunity to make a decision or VAR to get involved” ?@rioferdy5 and Steve McManaman give their verdict on Liverpool’s penalty ?
? @tntsports & @discoveryplusUK pic.twitter.com/wwH4emYXiI
— Football on TNT Sports (@footballontnt) December 10, 2024Liverpool will feel fortunate that they were awarded the penalty but Van de Beek gave the referee a decision to make after making the clumsy foul in their own box.Slot’s men were not at their best in Spain but as seen several times this season, the Reds found a way to come away from the match with all three points. https://www.caughtoffside.com/2024/12/10/liverpool-champions-league-tnt/
When it comes to home theater sound, one of the best brands to go with is Samsung. Over the last several years, Samsung surround sound systems and soundbars have done a phenomenal job at enhancing movie nights, which is why we’re always on the lookout for Samsung soundbar deals. As luck would have it, we came across a great one earlier today:
Right now, when you purchase the Samsung 3.1ch HW-Q6CC Soundbar, you’ll only pay $200. At full price, this model sells for $380.
Why you should buy the Samsung 3.1ch HW-Q6CC Soundbar
The HW-Q6CC is a Dolby Atmos soundbar, which means it can virtualize a full Atmos speaker configuration. Expect immersive audio, regardless of where you choose to sit or stand, plus a nice balance of highs, mids, and lows. And if you ever decide to relocate the soundbar to another room, Samsung’s Adaptive Sound Lite tech will automatically recalibrate the HW-Q6CC to the new space you place it in. Connectivity couldn’t be more effortless either: Thanks to HDMI eARC, you only have to worry about one wire going to your TV.
Far more than a home theater system, you’ll also be able to use the HW-Q6CC to stream music from a phone or tablet using Bluetooth. Pair two devices simultaneously and enjoy fast playback with Samsung’s Tap Sound feature, which lets you start playing a song from your phone through the Samsung soundbar just by tapping one device to the other.
While it’s hard to say how long this markdown is going to last, Samsung deals like this one have gone pretty quickly in the past. That being said, today might be the best day to save. Take $180 off the Samsung 3.1ch HW-Q6CC Soundbar when you purchase at Walmart, and be sure to check out our list of the best Walmart deals for even more holiday discounts!
https://www.digitaltrends.com/home-theater/samsung-hw-q6cc-soundbar-deal-walmart-december-2024/
The case in which two city lawyers are accused of forgery has taken a new twist after a prominent law firm has been implicated for alleged convenience in misleading court.
In the letter dated December 3, 2024 to the Inspector of Courts, pastor Daniel Walugembe has accused the lawyers, Robert Ssenfuka and Umar Nyanzi of SK and Partners Advocates of colluding with their colleagues at H&G Advocates to commit the alleged crimes.
Through his lawyers, Walugembe states that there is coordinated convenience between H&G Advocates and SK and Partners Advocates whose sole intention is to mislead and bias court against him which is very unfortunate and regrettable.
“Your worship, it is evident that in the letter written by H&G Advocates dated 23rd December 2021, requested for certified copies of proceedings, plaint, affidavit of service, and written statement of defense, consent judgment and decree in Civil Suit No. 699of 2017. Indeed in the letter dated 9th December 2022,” reads the petition adding that Natukunda Jeneva the Deputy Registrar certified the same documents.
According to the petition seeking for the intervention of the judiciary authorities into the matter, Walugembe insists that nowhere the registrar “gave any agreement to H&G advocates which they purportedly passed on to SK and Partners who are their conduits.”
Petition indicates that H&G Advocates is the law firm that represents Makerere University in the case litigated with Walugembe before the Land Division of the High Court; “But at no single point has H&G ever brought this purported sale agreement to disapprove or show inconsistent in his claim.”
The petition copied to the Chief Justice and other lawyers, the lawyers; Ssenfuka and Nyanzi are accused of concocting information and documents with a view of misleading court.
Through his lawyers of Alma Associated Advocates, Walugembe accused the lawyers of misleading court in the sworn statements to the principal judge that their client, Dr Ntwatwa Lule has never been party to earlier cases before the High Court.
“On that basis alone, it is our considered view that a person who can advise his client to lie on oath cannot be trusted at all. To demonstrate to you the perpetual lies of the accused persons in the affidavit they drafted for their client, drawn by SK and Partners Advocates, they advised their client to lie that he has never been party to application number 434 of 2019,” reads the complaint.
The petition copied to the chief justice, judicial authorities and lawyers was in response to complaints challenging the private prosecution of the lawyers Ssenfuka and Nyanzi.
Ssenfuka and Nyanzi both attached to SK & Partners Advocates are accused of fraud in regard to alleged forgery of agreements for Kibanja in Katanga near Wandegeya.
Last week, the Magistrates Court at Buganda Road, Jalia Basajjabalaba issued criminal summons against Ssenfuka and Nyanzi to answer accusations of forgery and uttering false
The duo is expected to appear in court on December 17, 2024 for plea taking and also for hearing formal application in which they are challenging the legality of the charges.
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It is alleged that the lawyers Ssenfuka and Nyanzi attached to SK & Partners Advocates while acting for and on behalf of their client, Dr Ntwatwa Lule committed criminal acts.
Court documents indicate that the accused lawyers are alleged to have committed forgery, uttering false documents and conspired to commit a felony when knowingly and unlawfully altered sales agreements dated February 9, 1996 and August 13, 1996 respectively.
H&G Advocates Accused of Forgery as Court Documents in Walugembe Case Face Scrutiny