One of the first things that you’ll notice when you start shopping for a mortgage is all the options that you have. It’s a good idea to have a trusted broker to help you look into all the different products and variables there are, but in the end it’s also your responsibility to make sure you’ve done some homework yourself.
Starting out by researching the fundamentals is a good idea and there’s no better place to begin than by looking at a fixed versus variable mortgage. Each has its own benefits, so consider these along with whatever the interest rate may be.
Like the name suggests, a variable rate mortgage has an interest rate that fluctuates with the set Bank of Canada rate plus the individual rate the institution you’re dealing with tacked on. You need to know something about the market here to get the benefits of these rates since if they go down you can save substantially in interest. However, when the rates start to increase, so does the amount you pay in interest.
Typically, it’s recommended that first time homebuyers get involved with the stability of the fixed rate that doesn’t change over the term of the mortgage so they can get used to the other costs involved with homeownership.
Stability is the catch phrase for the fixed rate mortgage. If you’re the kind of person that doesn’t like risk and wants to know exactly how much you’ll be paying each month, a fixed rate mortgage is the one for you.
However, most experts feel that the variable rate mortgage has historically been better for paying off the amount owing, but with the interest rates as low as they are now, there doesn’t seem to be much difference.
Drawing from a choice of over 40 lenders from major banks to private sources, Derek Lacey, AMP is the Mortgage Alliance agent dedicated finding you the right terms and the right Mortgage for your needs. Email him at dlacey@tmacc.com or call 519-624-9550. You can also visit his website at www.mortgagealliance.com/dereklacey.