Archive for April, 2013

When Rates Are No Longer The Major Deciding Factor

Thursday, April 18th, 2013

Mortgage rates are normally based on the Bank of Canada rate which is presently 1%. The rates vary slightly between financial institutions, and are presently ranging from 2.74 to 4% depending on the length of the term and whether you choose a fixed or variable rate.

Check out our current rates here.

 

The rates that YOU will be offered are based on the amount of your down payment and your credit rating.

In this market place we look for the BEST combination of rates and features. Depending on your needs and circumstances we look for a package that has great flexibility and good terms.

 

rates plus benefits

 

Here are some of the features that are available:

Prepayment – With a pre-payment privilege, you can make payments toward the principal portion of your mortgage over and above your monthly payments.

Closed mortgages have different types of pre-payment options. The amount you can pre-pay becomes important if you get bonus payments, a windfall or an inheritance.

An open mortgage means you can pay the entire principal sum without notice. This is a good option if you are self-employed or if you get regular bonus payments.

 

Portability -  This option allows you to transfer the balance of your current mortgage at the existing rates and with the existing terms and conditions, to your new home.

 

Expandability – If you need additional funds down the road, will your mortgage terms allow you to increase the principal amount? Normally the new rate will be a blended amount of the initial mortgage rate and the current rates. If you know you have a large renovation project planned, or if the kids are off to university this is a good option.

Do  YOU Prefer Security or Flexibility?

Mortgages are available with closed, open and convertible options, with fixed or variable rates. The options you choose should be based on the market (going up or down), on your financial goals and on your risk tolerance (desire for long-term security).

 

There are Two Rate Structures to Choose From:

A fixed-rate mortgage will remain the same for the length of the negotiated term. Your payment schedule is established in advance. You can choose either an open or closed mortgage, depending on the term.

A variable-rate mortgage fluctuates with the current market rates. Your monthly payment will remain constant (usually for a year or two), but the amount allocated to your principal will vary. If rates are going down, this may be a good option. If rates are start rising, you may want to convert to a fixed-rate mortgage.
If you are on a tight budget, you may be willing to pay more for peace of mind.

 

There are Three Payment Types to Choose From:

Open Mortgage
– This type of mortgage offers a great deal of flexibility, as it can be repaid in part or full at any time without penalty. This is a great mortgage if you believe interest rates are moving down or if you plan to move in the near future.

Closed Mortgage – Interest rates are fixed for the full term of the mortgage, and you will have to pay a penalty to change the agreement conditions. This type of mortgage is ideal for buyers who think that interest rates will rise and who are not planning to make any moves over the term of the mortgage.

Convertible Mortgage – With this mortgage you have the flexibility to convert to a longer closed mortgage at any time without penalty. If  rates rise, you can lock in.

 

Need a Mortgage?

If you are planning on buying for the first time, moving to a new home or renewing your mortgage, you should know where you stand. Please give us a call at 604-736-1855