It is a commonly held belief that making a large deposit on a mortgage down payment is the best thing to do. While there are some advantages to doing this, a larger down payment may not always be the best course of action for everyone. With that being said, there are tremendous benefits to making a large down payment. Nevertheless, before deciding on how much you should set aside for your mortgage down payment, here are some things to consider before purchasing that home in Walkerton Ontario.

Advantages of Large Down Payment

One of the greatest perks of making a large deposit is the possibility of a shorter mortgage period. Access to this perk, though, will rely heavily on whether or not you will be able to afford the monthly payments.

Lower Monthly Payments

If you opt for longer payment plan, then your monthly repayment amount will be significantly lower than if you opted for a small down payment. Needless to say, your monthly repayments will be higher if you opt for a shorter repayment term.

No mortgage insurance needed

If you make a large down payment, you can avoid the added expense of mortgage insurance. This is because mortgage lenders encourage clients who are unable to afford a large down payment to apply for mortgage insurance. This is a measure of protection for clients in case they default on the loan.

Interest Rates are Lower

Making a large deposit is one of the best ways to guarantee a lower interest rate. This is because the amount you will need to borrow will be lessened. As a result, you will get a lower interest rate and ultimately save money in the long run.

Coping Strategies for Small Down Payments

Not everyone is able to afford a large down payment. If you fall into that category, no need to despair. You will still be able to afford your own home but with additional conditions. The two main conditions you are likely to encounter are mortgage insurance and higher interest rates. Once you have overcome the hurdle of the deposit, the next thing you will have to consider and making the best of your monthly payments.One of the best things you can do in this situation is to pay more than the required amount each month. Arranging for an accelerated payment schedule is also a very wise strategy. These strategies may seem simple but if you are quite consistent, you can pay off your mortgage faster and even save yourself some money in the process.When deciding on how whether to make a large or small mortgage deposit, you should take into consideration, the impact on your finances after the payment is made. If your financial security will be compromised by a large deposit, then you'd be better off making a smaller deposit and employing the coping strategies listed above. If you still harbor uncertainties, you can get sound advice from a mortgage professional or your local Walkerton Real Estate agent.