Question: Want to pay more for your mortgage than you have to?
Most homebuyers and homeowners will answer that question with an emphatic “NO!”.
If you currently have a fixed-rate loan or are buying a home and considering a fixed-rate mortgage, you may be paying more than is necessary. When you choose the variable rate option, statistics show you’ll wind up paying less over the life of the loan than you would with a fixed rate.
Now that is great news!
Simple fact, lenders charge interest for the use of their money.
Most lenders borrow the money they lend, and they have to pay interest, too. The Bank of Canada sets the prime lending rates for the banks, and each institution sets its rates based on their own criteria.
Rates are quoted as Prime + or – a percentage point.
Variable rate loans are tied to the Prime lending rate. Therefore in an environment with historically low-interest rates, this type of loan is less expensive than a fixed loan, with rates tied to the bond market.
Most variable rate loans have a five-year introductory rate that is fixed, after that the rate can change with the market.
Variable rate loans fell out of vogue a few years ago when fixed rates were so low, but now they are making a comeback.
It’s important that you work with an experienced mortgage company when choosing the mortgage right for you.
We have access to many lenders to ensure you are in the best situation possible when you need financing and are here to help you so please get in touch at any time.
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