Home Loan In Canada

Home loans in Canada come in a variety of forms very similar to the options a United States citizen would have concerning the need for a mortgage contract. A home loan in Canada can be a fixed rate mortgage for a term of 6 months through 10 years. Variable rate loans are limited to 3, 4, and 5 year terms. The split term option house loans in Canada offer a combination of all terms, and a self directed Canadian home mortgage utilizes a specialty mortgage rate with optional terms based on situational factors.

Deciding on the payment options for a home loan in Canada can be determined by the purpose and need for the mortgage. If rates are low and stable or a borrower is willing to take a risk, a lower rate can be found with a short term note. The term is rolled over every six months, or the rate is floated against prime with the option of a rate lock to a longer term at a later date. Home loans in Canada with a term of three years or longer are considered long term. Long term loans have rates that are usually higher than short term rates, but by locking the rate in, no risk is taken if the prime should rise.

Canadian loans that allow the borrower to minimize risk by splitting the mortgage into two or more parts is a way to borrow at different rates with different terms and allows the borrower to refrain from "putting all their eggs into one basket". For example: A home loan in Canada for $150k can be split into five $30k segments with terms of 6 months, 1, 2, 3, and 5 year note lives negotiated at the best rates possible. The average rate of all five would rise and fall more slowly than changes in the market. Only the shorter terms are affected most over the first few years.

Lenders recommend anyone interested in applying for home loans in Canada to first discover their FICO score. A FICO score is the credit reporting score used by Canadian lenders that determines interest rate. The fastest way to raise a FICO score is to pay down credit card balances under 20% of their limit. Ideally the borrower should have no debt at all, after all, the Bible says in Romans 13:8 "Owe no man anything". Becoming debt free should be the priority of every Christian. God said that we cannot serve two masters. Serving God is much more important than worrying about debt.

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