Variable Fixed Rate Mortgage
Mortgage is a loan offered against some security. The security, in this case, is real estate like home or office. The loan is secured against property to ensure that the lending company can recover the money by selling off the property in case of any default in making payments. The lending company could be a bank or a financial institution. There are cases, wherein an individual or an entity who borrows the money is unable to repay the borrowed amount. In such cases, the lending company recovers the amount by liquidating the property. Mortgage loans are available at a rate of interest, which serves as an income for the lending company. Interest rates may vary depending on the option you choose. Some of the common types of interest rates are fixed rate, adjustable rate and balloon rate. Under each of these types of interest rates there are different categories and variable fixed rate mortgage is one of them. In this article, we shall discuss this type of interest rate and learn about mortgage Canada calculator.
Variable Mortgage Rate Canada
As the name suggests, this type of interest rate is variable. It is not in practice anymore. It was offered at prime rate less than 0.25%. It was adjusted every month and the borrower could enjoy lowest possible rate in the market. Moreover, it also gave the borrower an opportunity to pay the monthly installments in a fixed or variable manner. However, the economic conditions in Canada changed due to the global economic crisis. This resulted in the pulling out of the product from the market. The interest rate, which was offered at 1% below prime rate, was withdrawn from the market. It was often referred as “prime minus”. The changing trends brought a new product in the variable mortgage rate Canada market. The lenders in Canada at one point were offering “prime plus” option rather than prime minus option. Though a little expensive as compared to the prime minus option, it is still better than the fixed variable mortgage rate Canada. Borrowing money is a very sensitive decision and you must be extremely careful while taking any such decision. Proper financial planning is the key to a stress free financial situation. Therefore, consultation with Mortgage Professionals who only deal in mortgages is your safest bet vs. a Financial Advisor in the bank who can also do your mortgage but does not specialize in it. If you are in a dilemma about your borrowings then the mortgage Canada calculator for a proper planning for the right mortgage Canada.
Mortgage Canada calculator
A mortgage Canada calculator is not physical equipment; it is an automated tool for checking the financial implications of a borrower. Several factors have to be considered while borrowing money and a change in any of these variables/factors should be accounted for in the beginning. One has to make contingency arrangements, too, while borrowing money. After all, variable fixed rate mortgage is not free; you have to pay interest on the loan amount. Therefore, it is essential to calculate the variables of income and expenses. A mortgage Canada calculator will enable you to determine how much you can afford to borrow. Some of the variables include principal balance, periodic interest rate, compound interest, number of payments per year, the total number of payments and the monthly or periodic payment amount. There are formulas for determining the monthly installments and the total amount of interest paid on the borrowed money. However, these formulas can be very complex for a layman. Nevertheless, these calculators are available online and can calculate the details in a minute. They are easy to use and can give instant results. These online calculators have certain common criteria that can be chosen through the drop down menu. However, they may not include all the variables that will be applicable to your financial situation. In such cases, you can hire the services of a variable fixed rate mortgage broker to perfectly evaluate and study your case. The role of a mortgage broker is very crucial. Read on to learn more about these brokers and how they can help you take a right decision.
Role Of Mortgage Brokers
Whether you are planning to go for a variable fixed rate mortgage or a regular fixed rate one, you cannot dismiss the role of a mortgage broker. A broker is one who acts as an intermediary between the borrower and the lender. He works on behalf of several companies and can offer multiple products to choose from. Mortgage brokers are regulated by the banking and finance laws. However, you must not confuse a broker with a lender; it is not a broker who will be lending you the money. A broker is a facilitator between you and the lending company. Mortgage brokers can play a very special role in the process of availing a loan.
- Market Evaluation – A broker will evaluate the market and be well versed with the latest trends in the industry. They have up to date knowledge of the borrowing industry and the plethora of products available on offer. Thus, a broker can search the best product for you so that it suits your needs. They will help you choose the best product available in the market.
- Evaluation Of Your Financial Condition – If you intend to go for a variable fixed rate mortgage or any other type of product, the broker will thoroughly evaluate your financial condition. He will study your past credit history, the current situation, your earning capacity, the existing debts and the potential to earn. Apart from that, he will also evaluate your credit card history, previous borrowings, tax liabilities, income proofs and other related details. Depending on your current financial situation, he may advice you to apply for pre-approved loans to get a better deal.
- Documentation – A whole lot of documentation goes in to the application process of mortgage loans. For instance, you have to fill forms, submit bank statements, pay stubs, credit reports along with other details. The mortgage broker will take care of all this documentation. Once you hire a broker, there is no need to break your head with these nuances of borrowing.
Variable fixed rate mortgage is a long-term commitment; hence, it is important to be careful while borrowing money. Remember, that this money is not free; you have to pay interest on this borrowed money. Always ensure timely payments and do not skip your installments. Variable mortgage rate Canada will attract finance charges and fees. Another important thing to bear in mind is to avoid borrowing too much money. Do not borrow more than what you need. You may fall in a debt trap if you do not plan your finances properly. Take expert advice while borrowing to stay away from financial crisis.