Despite popular belief, and a lot of vendor marketing, the advantages in weekly vs. monthly payment frequency is slight. It is not really the frequency that makes a big difference but how much you pay. Any extra payment towards your principal dramatically improves your amortization period. Think payment amount not frequency of payment.

The purpose of a pre-approval is to confirm in writing the maximum amount of money that you can rely on for mortgage purposes. When interest rates are fluctuating, it’s an advantage to know what your borrowing limit is before you start house hunting. With a pre-approval, a lender will guarantee you for a specific mortgage amount for a period of time. If the mortgage interest rate drops before the lender advances the funds for a mortgage, you are given the lower mortgage rate. If the rates rise, you are given the rate at the time you had the mortgage pre-approved.

A second mortgage is simply an additional mortgage registered against the title of you home. Some lenders call it a “Home Equity Loan” or “Home Equity Line of Credit” and since these types of loans are registered against the title of your home as a second charge – they are all second mortgages.

A Co-signer is placed on the mortgage and is registered on the title. A Guarantor signs a document that personally guarantees the mortgage. Most banks will do both. Some banks prefer that co-signer live on the property.

No. The lender is not under any obligation to mortgage renewal. It does not ‘automatically’ renew. In fact if you have ‘missed’ or been late with any payments the lender could use this as an excuse not to renew with you. A loss of a job or a divorce may be another reason. But, in truth, no excuse is necessary for the lender to call your loan. This can not be understated. For example, it is common for businesses to find their commercial mortgages NOT renewed for any reasonable reason at the end of term. And this may be no fault of the business that paid their mortgage payments on time. A bank could refuse to renew because they don’t like the economic climate of a particular geographic area or even a type of industry a business operates in. Think about the hardships suffered. For this reason alone it is critical for businesses and homeowners to obtain a quote from a mortgage consultant 60 to 90 days before their current mortgage matures. This way if your current lender does not offer you a renewal you have a backup lender in the wings. If you use a mortgage consultant you will often benefit with a lower rate anyway.

Often a lender will attempt to charge a renewal fee or tempt you to renew without a fee if you sign within a certain ‘time offer’ at their posted rates. Please keep it mind that if you use a mortgage consultant it is very, very rare for you to ever pay a renewal fee. For all conventional residential mortgages there will not be a fee because the mortgage consultant will shop the market for you and find a lender that doesn’t charge a fee AND will beat your current lender’s mortgage renewal rate!

An open mortgage gives you the most flexibility in making extra payments towards your mortgage principal and even lets you pay off your mortgage entirely whenever you wish to. If you have uncertainty in your life such as a serious illness, a looming separation or a possible job transfer to another city it is better to have an open mortgage. This way if you ‘have to move’ you can pay off your mortgage without any penalty. This could save you thousands in prepayment penalties. Warning! Not all-open mortgages are created equal. Check with a mortgage consultant to see just how ‘open’ your mortgage is!

Compared to open a closed mortgage offers little to no privileges in paying off your mortgage early. You can not pay off your mortgage without attracting penalties, called prepayment penalties, from the lender. Warning! Not all closed mortgages are created equal check with your mortgage consultant as to how your prepayment penalties are calculated. The difference between one lender definition of penalty to another lender is enormous. Only people with very predictable lives should pick closed mortgages with long terms. And really, whose life is that predictable these days? Avoid long term-closed mortgages.

No. If you switch from one lender to another at your renewal date there will not be any penalties whatsoever. If you switch before your maturity date or renewal time there may be a penalty. If you have an open mortgage there probably will not be any charge. If you have a closed mortgage you will most likely have a cost. It is important to consult with a mortgage consultant so that you can determine whether or not a ‘break and run’ strategy will work for you. Often your penalties can be minimized when a mortgage consultant finds a new lender anxious for your business. A new lender will often assist with incentives to lure you over to them. Sometimes the incentive can be as high as a 3% cash back offer that can be used towards any prepayment penalties.

The usual thinking is that you should take a longer-term to lock in low interest rates; when interest rates are higher, you should look to a shorter term – 6 mos. or 1 year. Whenever the interest rate spread between short term and a long-term mortgage rates are significant it is always better to take the shortest term possible. Currently, rates are historically very low, so most people are locking in for terms of 5 or even 10 years.