A Mortgage Calculator
Can Help Toronto Homeowners Set New Financial Goals
The Greater Toronto Area real estate
market has continued to boom. According to the Toronto
Real Estate Board, 2014 sales were up by 6.7%, with the
average house price rising by 8.4% from the previous year to $556,602. This is
great news for residents who were either savvy or just plain lucky enough to
enter the market when homes were more affordable. Many homeowners now have
considerable equity that they can use to meet new financial goals, or perhaps
they want to refinance their mortgages for more favourable terms. It’s time to get out that mortgage
calculator again, Toronto residents!
How
to Use an Online Mortgage Calculator
Mortgage calculators allow potential
homeowners to accurately crunch numbers before going too far into the process, showing
the financial implications of various decisions. Many variables lead to a
viable payment schedule. Considerations are interest rates, payment schedule
(monthly, bi-monthly), down payment, closing costs and amortization (how long
it will take to pay the mortgage off in full).
While mortgage calculators are an important tool for first time owners
they also help current homeowners consider other options.
Refinancing
a Home Mortgage
Refinancing involves paying off an
existing mortgage in exchange for a new mortgage. There are a variety of
reasons that make sense to refinance a mortgage. Perhaps you want a better rate
of interest. Perhaps you’ve inherited some money and want to significantly pay
down the principal. Perhaps your financial circumstances have changed and you
want to have lower payments; this can be done by increasing the amortization
period. Note that any increase in the amortization period will lead to paying
considerably more in interest.
A great way to see if the refinancing
option makes financial sense is to crunch the numbers with a
mortgage
calculator designed for refinancing. This will
allow you to compare the original mortgage terms with a new one, taking into
account closing costs and penalties.
Second Mortgages
Another financial option is taking out a second mortgage. A
second mortgage is similar to a first mortgage, with fixed payments based on
the amortization period. Second mortgages usually have a higher rate of
interest than a first mortgage. They can be useful when you need a lump sum
loan and want to pay it off with fixed interest rates. To see if a second
mortgage works for you, check out the numbers with a
mortgage
calculator that allows you to compare terms.
Line of Credit
A calculator can also help you
determine how much equity you have in your home (the value of a home minus the
outstanding mortgage). That equity can allow homeowners obtain a loan at a much
lower rate as the loan is secured.
Find a Mortgage
Specialist
Although crunching numbers with a mortgage calculator can
help Toronto homeowners get an accurate picture of the financial implications
of various scenarios before getting too far into the process, it’s always wise
to seek out a reputable mortgage specialist to see what works best for your
economic situation. If you are intimidated by the big banks, look for an
independent lender. Many private lenders have more flexibility, helping you
find a plan that is right for your financial goals.