Before you decide on the right model and the lot location of your new Ashton Ridge Home, it is wise to first investigate what you can afford. The easiest way to do this is to get a pre-approved mortgage through your financial institution. This will give you peace of mind when visiting our Sales Centres.

Some of the things you will need to have with you the first time you meet with a lender are:

Your personal information, including identification such as your driver's license

Details on your job, including confirmation of salary in the form of a letter from your employer

Your sources of income

Information and details on all bank accounts, loans and other debts

Proof of financial assets

Source and amount of down payment and deposits

Proof of source of funds for the closing costs (these are usually between 1.5% and 4% of the purchase price)

The maximum cost of the new house you can afford depends on a number of things but the most important is gross household income, down payment, and interest rate. With this information your mortgage professional can get you a pre-approved mortgage. Although this pre-approved mortgage is not a guarantee of being approved for the mortgage loan, it will give you an excellent idea of where you stand fiancially.

Once you have made your decision on the model and lot, and signed the Agreement of Purchase and Sale, your mortgage professional will turn your pre-approved mortgage application into approved mortgage loan.

Depending on your down payment, you may have a conventional or high-ratio mortgage.

A conventional mortgage is a mortgage loan that does not exceed 80% of the lending value of the property. The lending value is typically the lesser of the property’s purchase price and market value. Your down payment is at least 20% of the purchase price or market value.

If you contribute less than 20% of the home price as a down payment you will typically need a high-ratio mortgage. This type of mortgage usually requires mortgage loan insurance, of which CMHC is a major provider. Your lender may add the mortgage insurance premium to your mortgage or ask you to pay it in full upon closing

Fixed, Variable or Adjustable Interest Rate

Mortgage interest rates are either fixed, variable or adjustable. A fixed rate is a locked-in rate that will not increase for the term of the mortgage. A variable rate fluctuates based on market conditions while the mortgage payment remains unchanged. With an adjustable rate, both the interest rate and the mortgage payment vary based on market conditions.

Closed Mortgage

A closed mortgage may be a good choice if you'd like to have a fixed payment that will allow you to adjust your budget to your new lifestyle. However, closed mortgages are not flexible and there are often penalties or restrictive conditions attached to prepayments or additional lump sum payments. It may not be the best choice if you decide to move before the end of the term or if you want to benefit from a potential decrease of interest rates.

Open Mortgage

This type of mortgage is flexible and can usually be pre-paid by any lump sum or paid off at any time without penalty. An open mortgage can be a good choice if you plan to sell your home in the near future or to pre-pay with large lump sums. Most lenders will allow you to convert to a closed mortgage at any time, although you may have to pay a small fee.

Term

Your lender will also inform you on the term options for the mortgage. This is the length of time that the agreed-upon mortgage contract conditions, including interest rate, will be fixed. It can vary from six months to ten years. Choosing a longer term (e.g.: five years) gives you the chance to plan ahead and protects you from interest rate increases while you adjust to homeownership. Weigh your options carefully and don't be afraid to ask your lender to work out the differences between a one, two, five-year term or longer term.

Amortization

This is the amount of time over which the entire debt will be repaid. Many mortgages are amortized over 25 years, but longer periods are available. The longer the amortization, the lower your scheduled mortgage payments, but the more interest you pay in the long run.

Payment Schedule

A mortgage loan is often repaid in regular payments, either monthly, biweekly or weekly. Payment schedules that are more frequent can save some interest costs by reducing the outstanding principal balance more quickly than with monthly payments. The more payments you make in a year, the lower the overall interest you have to pay on your mortgage.

Keep in mind that mortgages may have important payment features that can save you money and let you be mortgage-free sooner.