Fixed Residential Rate
This rate will stay the same over the course of your term regardless of market fluctuations. Fixed rate Mortgages can be open or closed
Closed Fixed Rate
- If you believe that interest rates will rise - you will be protected against an increase.
- If you have a low threshold of tolerance for market fluctuation.
- If you prefer to have the same payment over the course of your term.
- If you don't intend to make any or very few prepayments of your mortgage principle.
- If you don't plan to sell your home in the near future.
Open Fixed Rate
- If you plan to sell your home in the near future
- If you intend to make prepayments of more than 20% of your mortgage principle
- If you prefer to have the same payment over the course of your term
Why Choose a Fixed Rate Mortgage
The process of buying a house should begin with a review of the existing mortgage terms. Real estate analysts have revealed that 66% of Canadians prefer the fixed rate mortgages over the variable rates. The available rates range from a 1-year mortgage rate to mortgage rates that go beyond 10 years. However, the 5-year fixed mortgage rates are the most popular and the least complicated for a majority of Canadians.
Advantages of the 5-Year Fixed Mortgage Rates
- The 5-year fixed mortgage rates ease the anxiety of budgeting.
- They fall within the risk-neutral average when compared other options.
- These mortgage rates are popular and convenient across all the age groups.
- The borrower has enough time to plan finances and investments.
- They are manageable for average income earners.
Fixed Rate Mortgages – Clearing Misconceptions
Some aspiring home buyers often mix up facts regarding the 5-year fixed rate mortgages. The common challenge is usually the distinction between the term of the mortgage and the amortization period. In essence, the 5-year fixed rate refers to the duration within which the interest rate shall remain unchanged from the point of engagement. The lapse of 5 years would mean some changes on the interest rate. On the other hand, amortization period refers to the period in which the entire mortgage shall be cleared. Amortization period could be 25 years or any other alternative as agreed in the terms.
Variable Residential Rate
Your payment is fixed for the chosen term and you rate will fluctuate with the market's variations.
Closed Variable Rate
- If you believe that interest rates will drop, and you can enjoy that benefit.
- If you have a high threshold of tolerance for market fluctuation.
- If you have the ability to absorb an increase in your payments in the event of a rate hike.