Are you getting
ready to buy a home and obtain mortgage financing? Knowing your options before
jumping in is important. This is part 1 of a 4 part series that gives you
important Ontario mortgage news and information about the various types of
mortgages available in Ontario. Getting a mortgage does not have to be
stressful, and knowing what mortgage types are available to you can help keep
the search for your perfect home stress-free.
This first
Ontario mortgage news blog will focus on the fixed rate mortgage. The fixed
rate mortgage is often the most popular, but what is a fixed rate mortgage?
Well, a fixed rate mortgage is a type of
mortgage financing loan where the interest stays the same throughout the entire
loan period, as opposed to other mortgage loans where the interest rate may
adjust. This means that your interest rate is ‘fixed’ and that it does not
fluctuate over the course of the term.
There are many benefits
to this type of mortgage, and many things to consider when looking for the best
mortgage financing rates to suit your needs.
Firstly, a fixed rate mortgage offers you the convenience of a
set monthly payment that does not change. Set at the beginning of the mortgage
loan period, a fixed rate mortgage will not increase or decrease as interest
rates change. This means that there are never any unwelcome surprises when it
comes to that monthly withdrawal.
A second, and
arguably even more attractive benefit, is that, since a fixed rate mortgage
will not change even if interest rates change, that you are protected in case
of a dramatic interest rate hike. So, even if two years from now the interest
rate skyrockets, your rate will remain the same throughout the entire term of
the mortgage, ultimately saving you a great deal in terms of interest fees.
What is the
normal length for a fixed rate mortgage?
Although term lengths differ from lender to lender, the most common length for
a fixed rate mortgage is 5 years. However, most lenders will offer a one year
term mortgage, two year term mortgage, three year term mortgage, four year term
mortgage, and some lenders may even offer a ten year term mortgage. The term
you choose will largely depend on your future financial goals and all options
should be discussed with your mortgage broker.
Why choose a fixed rate mortgage? As mentioned, the convenience of
a set monthly mortgage payment and a never changing interest rate make a fixed
rate mortgage ideal for many. Compared to a variable rate mortgage, a fixed
rate mortgage may be a bit more expensive, but it also involves a lot less risk
to you (since a variable rate mortgage fluctuates depending on an ever changing
interest rate). No hassle means less stress for you!
For more Ontario mortgage news or to find
out more about a fixed rate mortgage, please contact Paul Mangion of The
Mortgage Centre at 416-204-0156 or visit www.themortgagecentretoronto.com.
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