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Interest Rate Options
Fixed Interest Rates
In a fixed rate mortgage, your interest rate doesn't change during the interest rate term.
This has its advantages because you always know what your payment is going to be and there is no chance of it increasing during the term. The downside is that it also won't decrease during the term should the bank's prime rate fall.
This is a great solution if you are a 'sign it and forget it' type of person - if you don't watch the market - if you don't like risk - or if you could not afford to pay an increased mortgage payment right now. Click here to view average 5 year term interest rates since 1951.
Variable Interest Rates
In a variable rate mortgage, the interest rate varies with changes in the Bank's Prime rate. As the Prime rate increases, so does your mortgage payment.
The benefit to this mortgage is that often it has a lower interest rate than a fixed rate mortgage and if Prime rates fall, then so does your payment.
On the other side, you have to be aware that if Prime rate increases, so will your mortgage payment - and there is no upper limit.
Now, with variable rate mortgages, you have the ability to convert it to a fixed rate mortgage at any point during the term of the mortgage. A critical decision when choosing a variable rate mortgage lender is understanding the conversion rules up front. There are differences between lenders.
If the timing is right, this can be a very cost effective solution. Understand, however, that fixed rates often increase before variable rates, so this option is best for someone prepared to watch the market and interest rates so they are not caught unaware.
In a fixed rate mortgage, your interest rate doesn't change during the interest rate term.
This has its advantages because you always know what your payment is going to be and there is no chance of it increasing during the term. The downside is that it also won't decrease during the term should the bank's prime rate fall.
This is a great solution if you are a 'sign it and forget it' type of person - if you don't watch the market - if you don't like risk - or if you could not afford to pay an increased mortgage payment right now. Click here to view average 5 year term interest rates since 1951.
Variable Interest Rates
In a variable rate mortgage, the interest rate varies with changes in the Bank's Prime rate. As the Prime rate increases, so does your mortgage payment.
The benefit to this mortgage is that often it has a lower interest rate than a fixed rate mortgage and if Prime rates fall, then so does your payment.
On the other side, you have to be aware that if Prime rate increases, so will your mortgage payment - and there is no upper limit.
Now, with variable rate mortgages, you have the ability to convert it to a fixed rate mortgage at any point during the term of the mortgage. A critical decision when choosing a variable rate mortgage lender is understanding the conversion rules up front. There are differences between lenders.
If the timing is right, this can be a very cost effective solution. Understand, however, that fixed rates often increase before variable rates, so this option is best for someone prepared to watch the market and interest rates so they are not caught unaware.
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Tony Antaya
AMP
Mortgage Agent
905.689.3213
tony.antaya@migroup.ca
138 Brian Boulevard, Waterdown
AMP
Mortgage Agent
905.689.3213
tony.antaya@migroup.ca
138 Brian Boulevard, Waterdown
Jim Cook
MBA, CMA, AMP
Mortgage Broker
519.396.6800
1-877-587-6800
james.cook@migroup.ca
819 Queen St., Kincardine
MBA, CMA, AMP
Mortgage Broker
519.396.6800
1-877-587-6800
james.cook@migroup.ca
819 Queen St., Kincardine
Registered trademark of Mortgage Intelligence Inc. 2009, Mortgage Intelligence Central Office 5770 Hurontario Street, Suite 600, Mississauga, ON L5R 3G5 FSCO 10428
Jim Cook Broker Lic. M08001302 Tony Antaya Agent Lic. M08001243
Jim Cook Broker Lic. M08001302 Tony Antaya Agent Lic. M08001243
The MyMortgagePlace team has locations in Kincardine and Waterdown serving all of Ontario.
