Mortgage Basics: Term
Next up in our Mortgage Basics series is term. The term is the period of time in which you are committing to an interest rate and all of the other conditions accompanying the mortgage. The most commonly taken term in Canada is a five year fixed, but there are plenty of other term lengths that you can sign on for. Most lenders have 1, 2, 3, 4, 5, 7, and 10 year terms for fixed rate mortgages. On the variable side of things lenders tend to only offer either a 3 (very limited lender choice) or a 5 year term.
Serious thought should be given to the length of term that you agree to. Many people focus solely on the rate associated with any given term, but there are other factors to think about as well. Are you thinking of selling in the near future? Or is there any other reason that you may need to break your term in the near future? If so consider taking a shorter term to alleviate the penalty costs should that happen.
As always I am more than happy to discuss your unique situation and provide any information you need to choose the term that makes sense for you. Shoot me an email with your questions or book an appointment so we can chat.