Set the mortgage amount, repayment period and rates
A comparison starts with the amount borrowed, the repayment period and assumed interest rates. The repayment period is also called amortization. A variable-rate scenario needs assumptions about when the rate could change and by how much. Those inputs illustrate a scenario; they are not a rate forecast.
A comparison may examine a fixed-rate mortgage and variable-rate arrangements whose payments change or remain fixed until the contract requires a change. The actual mortgage agreement determines how the loan operates.
Compare payments with interest and principal repayment
A smaller payment can leave more money available now while repaying less debt. Looking at total interest, principal repaid and the remaining balance shows that difference over the period being examined.
For a rental, include rent and operating expenses alongside the mortgage payment to compare the property's monthly cash flow.
Understand how a variable-rate payment changes
With an adjustable payment, a rate change can change the payment. With a fixed payment, it can change the amount going towards interest and the amount repaying principal. The mortgage agreement determines what happens at a trigger rate and under other lender conditions.
Read the trigger-rate guide for the details to check in your agreement.
Include mortgage terms in the comparison
The scenario with the lowest interest total does not answer every mortgage question. A planned sale, refinance or extra payment may have costs and conditions under the contract.
Contact Streetwise about your mortgage options. For mortgages across several properties, read about the Portfolio Financing Review.
