For a lot of people looking to acquire a mortgage, the math seems pretty simple: A mortgage with a lower interest rate means that you will end up spending less money than a mortgage with a higher one. However, choosing a mortgage simply because it offers the lowest rate is not always the best course of action.
There are a lot of other conditions you should be aware of when selecting the mortgage that is best suited to your financial needs and goals. While lower interest rates will help keep your monthly payments low you should also consider:
- Your ability to make prepayments
- Your ability to make additional principal payments
- How flexible your mortgage is when it comes to refinancing, if necessary
- The payout penalties
- The amortization period
If you choose to go with a variable rate mortgage you should also consider what the prime rate is likely to do over the course of your mortgage. All of these factors will impact your financial situation in some way, so they need to be considered carefully.
If you have any questions about selecting a mortgage that is best suited to your financial needs and goals, or any other questions about the mortgage application process, you should contact your mortgage broker. They will be able to offer you more detailed information based on your particular financial situation.