How to Get the Best Mortgage Rates in Canada
Getting the best mortgage rates when you are planning to buy property can be hefty and difficult because of rapid fluctuation in the rates market and constant competition amongst the institutions.
The Canadian market is booming with an economic uplift at the moment so it’s a good choice to go for a property investment at this stage.
However, with the plethora of different mortgage plans springing up and lenders offering varied rates in the mortgage market these days, it is easy to get fooled by attractive offers that can be troublesome in the future.
Keeping in mind the following few pointers can help you a great deal in making the best decision that can pay you back in folds and ensure a smooth and care-free payment schedule in the schedule of your mortgage.
Selecting the Best Mortgage Plan
The first step when you are looking to buy a property is doing adequate market research and homework, because the mortgage rates are rapidly shooting upwards or sloping downwards in Canada.
Therefore it is necessary to keep a lookout for the fluctuation in the mortgage rates and devise their pattern.
If you think that the mortgage rates are currently low at the moment and will rise upwards instead of dropping more, then a fixed rate mortgage plan will work best for you.
The fixed rate Mortgage plan allows you to pay your mortgage rates at a fixed and pre-planned rate, no matter how much the rates increase in the future.
Fixed mortgage rates give you a sense of security and contentedness because you don’t have any worry of not having the access to pay your mortgage in case of a financial uphill and an increase in the rates.
The only disadvantage of the plan is that if you lock in your mortgage at a higher fixed rate and the market steeps down to a lower rate in the future, you still have to pay a higher amount of mortgage till your term expires.
On the other hand, a variable mortgage rate allows you to go by your mortgage payment with the flow of the market. If you notice a pattern of increasingly steeping rates in the market, then go for a variable mortgage because that will help you pay less in the course of your mortgage.
However, in case of a sudden increase in the market rates, you will end up paying a much higher amount than what you had started with.
Information about Basic Mortgage Factors
It is necessary to know about the following few mortgage factors before locking in to a plan. Adequate knowledge of the following will ensure a smooth and trouble free payment plan.
- Open or Closed Mortgage
Open mortgage plans allow you to pay off your mortgage amount before the amortization period expires without charging any extra penalty.
Whereas in closed mortgage, incase you pay off your entire loan before the expiry of your amortization period, you will have to give a penalty fee to your mortgage lender.
- Interest Rate
Interest rates vary from state to state, and are different for fixed and variable mortgages. Fixed rates are slightly higher than the variable mortgage rate plans. Also the rates are directly related to the period of the mortgage term. Longer the term of the mortgage, higher will be the rates.
- Down Payment
When you apply for a mortgage plan, the first thing you have to pay is your down payment, or caution money. It is necessary to do ample saving in advance for your down payment, so that you can opt for a mortgage loan any time you want.
- Mortgage term
A mortgage term is pre decided time frame after which your mortgage rates reset to the current rates in the market.
For example, if you lock in your mortgage at a rate of 5 % today, after the expiration of your mortgage term, your rate will be decreased or increased to the current mortgage rate in the market.
Mortgage terms range from a period of six months to 10 years.
- Amortization Duration
Amortization period refers to the total time in which you need to complete the payment of your mortgage loan. It ranges from a period of 25 to 30 years, depending upon your choice and financial stability.