The Advantages of A Shorter Amortization Period
For first time Ontario home buyers, choosing the length of the mortgage amortization period is one of the important decisions they will ever have to make in their lives. It is easier when considering Ontario mortgage rates. Obviously, the lowest mortgage rates Ontario lenders are offering should be considered carefully; the best mortgage rates Ontario home buyers usually choose are those which do not require them to pay high interest rates.
But determining the right number of years it may take to finish paying off a mortgage loan requires more serious consideration. There are advantages to both longer and shorter amortization periods. But for some home buyers, shorter is definitely better.
One of the main reasons why many home buyer choose to shorten the amortization period is that it enables them to be mortgage free a lot sooner. Because they have contracted to repay the loan in a shorter time period, then the amount of money they have to pay in interest is also significantly decreased as well.
Another important reason for a shorter amortization period is that the home buyer can also quickly build up equity. Equity is the market price of the house, minus the amount of the outstanding loan. Once the mortgage loan has been totally repaid, then the equity is the current value of the house, free from other obligations. If the house is the owner’s primary residence, then no taxes even have to be paid on any profit made if the house is resold.
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