Is a Fixed Rate Mortgage or a Variable Rate Mortgage Better?

When you’re looking at what kind of mortgage you want, you’re going to want to understand what your options are; this is when you’re going to talk to one of our Toronto mortgage brokers. We’ll be able to help you figure out which type of mortgage is right for you. Here we’re going to talk about the differences between a fixed rate mortgage and a variable rate mortgage. Just because they sound the same doesn’t mean they are, so it’s important to make sure that you’re getting the best one for you.

What are Fixed Rates?

Fixed rates mean that the rate of interest is fixed over the term of the loan. This can change however if you don’t keep up with payments or you hit one of the contingencies in the loan (like paying early). So even if you’re offered a fixed rate mortgage, you’re going to want to be careful about how it’s structured so you’re getting a good deal. It’s also important to note that a fixed rate mortgage will usually start out with a higher interest rate than a Canadian variable rate mortgage; if done right you’ll get a lower rate of interest over the life of your loan. Speak with a Toronto mortgage broker like us before you choose this kind of mortgage.

What are Variable Rate Mortgages?

Canadian variable rate mortgages are mortgages with interest rates that aren’t fixed. We as Toronto mortgage brokers will offer these to you alongside fixed rate mortgages. Low interest rates are forecasted to last through 2014, so you’ll have awhile to pay down as much principal as possible.

You’ll want to pay attention to something known as the “caps” in your mortgage paperwork. An annual cap will be the amount of points that a mortgage can fluctuate each year. A lifetime cap is the max cap on how much higher it can go over the lifetime of your loan. So if you get a VRM at 5% now, and your lifetime cap is 6%, your interest rate should never go above 11%. You’ll want to speak with a Toronto mortgage broker to make sure that there are no caveats in the contract to make this higher.

What are Hybrid Mortgages?

Hybrid mortgages generally start off as a fixed rate mortgage and slowly convert over to a variable rate mortgage over time. These will get you big savings on your interest rates over time, but they can balloon to a high interest rate when they convert to a variable rate mortgage. You’ll want to make sure you’re very careful about taking a Canadian hybrid mortgage. This is why you’ll want to speak with one of our Toronto mortgage brokers to make sure that you’re making the right choice for you.

There are many kinds of mortgages, but there is only one right solution for your needs! Let us help you find it today; why pay more than you have to?

Should You Convert Your Variable Rate Mortgage to a Fixed Rate Mortgage?

If you currently have a variable rate mortgage, or an ARM, you may be wondering if it’s time to get a better deal. If you want to know what’s right for your situation, you need to speak with one of our Toronto mortgage brokers. We’ll be able to help you understand if a refinance is right for your situation, and how you can get one. There are so many different ways that you can get a better loan if you can fix your terms, so it’s always worth a look to see if it’s the right thing for you.

What is a Variable Rate Mortgage?

Variable rates, or adjustable rates, are a kind of interest rate term. Variable means that it will float up and down with the Prime Interest Rate set by the Bank of Canada (and other national banks in other countries). Interest rates right now are quite low, but if you negotiated the terms of your agreement before they were low it may be time to renegotiate. Whatever you do, you’ll want to make sure you speak with a Toronto mortgage broker to find out what your options are.

What is a Fixed Rate Mortgage?

Instead of a mortgage that floats up and down with the economy, a fixed rate mortgage stays fixed; this can change if you default on your payments or pay late and with other conditions that will be in your mortgage contract. By and large a fixed rate mortgage is the kind of mortgage that you want to get. You can change your ARM to a fixed rate or your fixed rate to an ARM. Speak with one of our Toronto mortgage brokers to see what kind of deal you can get if you want to refinance your mortgage.

Should You Convert?

If you want to be able to save more money every month and pay off your mortgage faster, converting to a fixed rate mortgage can be the ebst thing to do. Not everyone will reap the benefits of this kind of switch though, so it’s important to understand your options. Some people will benefit from this kind of a conversion. Right now interest rates are the lowest they’ve been in decades; interest rates should hold steady through 2014 but beyond that no one knows for sure. With a fixed rate mortgage your mortgage will remain fixed at that interest rate (so 5% for example for the next 30 years). You’ll be able to use more money to pay off your mortgage faster and spend less on interest payments.

How do You Convert Your Mortgage?

The first thing you’re going to want to do is speak with one of our Toronto mortgage brokers. We’ll be able to help you evaluate your situation, helping you to understand what is right for you. Some people can benefit greatly from converting their mortgages, others are better off keeping things the way they are. Speak with one of our Toronto mortgage brokers to find out how a mortgage conversion could help you save money today!

What is a Fixed Rate Mortgage?

fixed rate mortgages in torontoThere are two types of mortgages, and a fixed rate mortgage is the most sought after for a really great reason: the low rate you can secure for yourself now will last for the next 30 years if you play your cards right. You’re going to need a great Toronto mortgage broker (read: us!)who knows what you can and can’t expect out of your mortgage application. Here we’re going to talk about fixed rate mortgages and what the benefits are. Just remember that if you don’t qualify for this type of mortgage there are always more lending fish in the big wide financing sea.

What is a Fixed Rate Mortgage?

Fixed interest rate mortgages keep the same interest rate over the course of the loan. Adjustable rate mortgages on the other hand can float up and down with the economy and you can wind up paying thousands of dollars extra in interest every year. Interest rates are at all-time lows right now, and you’ll be able to lock in a single digit interest rate for years to come.

Fixed rate mortgages do come with their own problems, however. If you are hit with a penalty your interest rate could double or triple overnight. Penalties can range from pre-payment (paying your bills early for example), late payment penalties, and more. This is why it’s important to get a mortgage broker on your side. The language in a mortgage, no matter what type of interest rate it bears, can be so thick and difficult that it can be hard to understand just what you’re signing.

What are the Benefits of a Fixed Rate Mortgage?

There are many benefits aside from not having a changing interest rate. Many fixed rate mortgages are portable mortgages that allow you to move the financing from one house to another if you move. Some will feature easier access to Canadian home equity loans, just in case you ever need to draw equity out of your house. Others will cater to those who have a less than perfect credit history. Whatever you’re looking for you’ll be able to find it with a fixed rate mortgage.

Is a Fixed Rate Mortgage Right for You?

This really depends on what you plan to do with your home. If you want to use the home you’re buying as a primary residence and live there for a lengthy period of time, a fixed rate mortgage is a great choice. You’ll want to speak with one of our Toronto mortgage brokers to see which type of mortgage is the right one for you.

On the other hand, if you’[re buying a second home to use as a rental property or as a fixer upper top make a profit later, you will want to think about an adjustable rate mortgage instead. Make sure you do your research so you know which one of these will be the right choice for you and your needs.