Term Selection Checklist
Deciding what term to pick? At a minimum, you need to answer these questions first:
- What is your mortgage amount? (mortgage size impacts rate)
- What is your home value? (loan-to-value impacts rate)
- Mortgage type? (purchase, switch or refinance)
- Occupancy? (owner-occupied or non-owner occupied)
- Closing date? (the lowest rates are often for closes within 30 days)
- Credit score? (the best rates require 680-720 minimum)
- Any missed payments in the last 3 years?
- What city and province do you live in?
- Is it an easily marketable (salable) property?
- Are you a first-time buyer?
- How old are you and your family members?
- What is your net worth, not including home equity?
- Can you prove income in the same job for the last two years?
- Are the jobs of all applicants on the mortgage secure?
- What is your total debt service ratio (calculate it here using TD’s posted 5-year fixed rate)
- If you had to guess, what is the minimum number of years until you might move?
- What are the chances you’ll need to refinance before maturity?
- Do you have access to cash for at least four months of living expenses?
- If interest rates rose four times (1%) in six months, would that cause you stress?
- Do you also require a line of credit?
- Will you need to prepay the mortgage early? If so, how much and how early?
- If your payment increased 20%, what kind of financial stress would that create?
- Are you okay with re-applying for a new mortgage every year or two?
- What amortization do you prefer? (e.g., 15, 25, 30 years?)
- Do you have any other goals or plans that might impact where you live or the mortgage you get?
This is not meant to be a comprehensive list or replace the advice of a professional mortgage planner. But it does cover most of the big term selection factors.