Finding the mortgage that is best for you, best for your family, and best for your unique situation can take a little time (and a little research). So we decided to get down to the basics on the differences between short-term and long-term loan options.

If you have any experience in the world of home-buying and mortgages, you have, most likely, heard the terms 15-year fixed mortgage and 30-year fixed mortgage. These are the two standard types of fixed mortgages available.

Other than the duration of the payment period, are there many other differences? Well, yes! And the biggest one is whether or not you are in a financial situation to take on a shorter term loan.

To break it down- a 15-year mortgage cuts the repayment period in half, making your monthly mortgage payments higher.


Things to consider

There are two different frames of thought on this topic. The first is if you can realistically afford the higher mortgage payment each month. Now, if you can afford it and still have some disposable income remaining for other bills and emergency situations, repaying your loan over a shorter period of time may be ideal for you. Now, the other frame of thought is simply the amount of money you can save with a shorter term mortgage.

Over the span of 15 years, versus 30, you will save significantly on interest alone (usually 40 to 50% of the loan balance).

Is it too late to switch?

Regardless of the term you originally settled upon for your mortgage, there is a possibility of changing it, if the time is right. You are able to switch over to a shorter repayment period, but it definitely one that you need to make carefully.

While it is much simpler to switch to a lower repayment period, if things begin to get difficult, you are not simply able to fall back on your original 30-year mortgage. Rather, you will have to completely refinance the loan in order to do so. And refinancing, as we discussed in one of our previous blogs, comes with some additional costs of its own.

Getting down to the brass tax

Realistically, this is something to consider and to keep in mind as you begin your home-buying journey. And, honestly, it is a great idea to talk it over- with your mortgage lender, with your significant other, with your friends- before you are even ready to take the plunge.

Having a comprehensive understanding of mortgages and your options before getting pre-approved for a loan is one of the best pieces of advice we can give you. The more you know, the more you have discussed your options, and the better you understand the entire process will leave you feeling better equipped to move forward with your decision to purchase a home.

We do pride ourselves on providing excellent customer service, as well as making it our goal to ensure your entire mortgage process is as quick and as easy as possible. So if you have questions or need someone to talk loan logistics with- our experienced loan officers are available.

While we may have said it before, we are going to say it again, making a plan that is 100% right for your personal situation is the best first step you can take after beginning to educate yourself on the options available to you.

This is especially true when it comes to solidifying the length of your repayment period. Just because it seems ideal in the future, it may not be realistic for you to take on a 15-year mortgage at this point in your life. That is why it is great to keep in mind- there is always the opportunity and possibility of making adjustments to the loan (through refinancing and other tools) later on in the future.


Total Home Lending



Natasha Mason