What kind of mortgage do I need?
That depends on your lifestyle and unique financial needs. In partnership with London Life Insurance Company, Great-West Life offers a wide range of mortgages – including open and closed, or fixed and variable rate mortgages – that can be tailored to suit your personal circumstances.1
The important thing to keep in mind is that mortgages, like the homes they help to buy, are rarely the same. That’s why Great-West Life has partnered with experienced credit planning consultants who can help you enter into a mortgage that’s right for you.
How does it work?
Your financial security advisor will put you in touch with a credit planning consultant who will show you mortgage options that are right for your lifestyle and budget. To get started, you’ll need to decide on a down payment amount, amortization period, mortgage term, type of mortgage and payment schedule.
Once you’ve settled on a home and mortgage, your financial security advisor can help you protect your investment with the right life insurance coverage.
What else do I need to know?
You’ll need to make a minimum cash down payment when purchasing a home. With a conventional mortgage, you must provide at least 20% of the appraised value of the property. But with a high-ratio mortgage, you’re only required to provide a minimum 5% of the property’s appraised value.
Keep in mind that a high-ratio mortgage will come with a mandatory mortgage insurance premium, which will add to your total payment and could make it longer for you to pay off your mortgage. For that reason, it’s in your best interest to aim for a down payment of 20% or more.
The amortization period is the length of time you’ll take to pay off your mortgage. You can choose an amortization period of 25 years or less. Keep in mind that while a longer amortization period means lower payments, it will increase the total amount of interest you’ll be required to pay.
The mortgage term is the length of time you commit to a particular type of mortgage. In most cases, mortgage terms last from 6 months to 5 years. Generally speaking, a longer term will result in higher interest rates. However, you may want to “lock into” a longer term to ensure that your interest rate does not change over the course of the term. Keep in mind that it’s a better idea to choose a shorter-term strategy if interest rates are high.
Type of mortgage
First, you’ll need to determine if you want an open or closed mortgage. An open mortgage allows you to pay your mortgage back any time without incurring a penalty. A closed mortgage, meanwhile, requires you to follow a set payment schedule for the entire mortgage term.
Next, you’ll need to determine if you want a fixed or variable rate mortgage. A fixed rate mortgage may be best if you believe interest rates will go up or if you’d like to keep your payments the same over the course of your mortgage term. The advantage of a variable rate mortgage is that interest rates could go down, saving you money. At the same time, however, interest rates could spike unexpectedly, increasing the cost of your mortgage.
There are a variety of ways to pay for your mortgage. You can choose monthly, semi-monthly, accelerated bi-weekly or accelerated weekly payments, with the latter two choices helping you pay the mortgage off sooner, thereby saving you interest.
The payment option that’s best for you will depend on your financial situation and future goals. Your financial security advisor and credit planning consultant can help you make the right choices.
For more information about mortgages, speak to your financial security advisor.
1 Mortgages and mortgage services are provided by London Life Insurance Company. To find out more about the relationship between Great-West Life and London Life, visit greatwestlifeco.com Opens a new website in a new window.
Talk to an expert
Not feeling confident in your finances? You can talk to one of our financial security advisors who will work with you to craft a financial plan tailored to your needs.