Knowing the Terms of your Mortgage
Prepayment
Knowing the terms of your mortgage, like the option to pay off your mortgage faster should be a consideration when reviewing your mortgage terms. Prepayments allow you to pay off a little more each year (usually a set portion of you mortgage amount). This is a great feature if, say, you get yearly bonuses from works, work commission based and would like to use the income from busy times towards paying down your debt, or expect to be earning more in the coming years.
Prepayments come in many forms, and each lender had their own features. Some allow you to increase you regular payments, so you pay a little more each period. Alternatively, you could have the option to make a lump sum payment that goes directly to decreasing your principal, so no interest is paid on those extra funds.
Portability
Now, what is you decide to move; you would like the option to take your current mortgage and terms to put towards your new home. You may also have the option to increase the amount without having to pay the possible costly consequences of breaking your mortgage. You get to move without the stress of having to obtain a new mortgage, at a possibly higher rate.
Assumability
Lastly, consider your parents’ mortgage and your family home. They might be moving to a smaller more manageable property or to warmer weather; but you love this home and would like to take over their mortgage. Without assumability, you would have to get a new mortgage at current rates, and your parents would likely have to pay discharge fees. Instead, so long as qualify for the outstanding amount, assumability allows you to take over the remaining balance of their mortgage with their rate and terms.
