Mortgage Rates in Canada
There was a time not long ago when I knew very little on the subject of mortgage rates. It was one of those things that never really affected me directly, so I paid very little attention to it. Even as someone with a mathematics degree, I had very little interest in interest rates (pun intended). Buying a home was not on my radar as I was renting a downtown apartment in a fairly big city.
Over the last few years, there have been many changes in my life that have required me to shift my perspective on many things, the most important of which is owning a home. I have left the big city and now live in a rural part of the Maritimes with my long term partner. In the last few months, we have been actively discussing and planning on buying a home together. I have had to learn a great deal about how to finance for a home purchase. Of course, finding the best interest rate is top priority.
I never realized how big of a factor your interest rate is when determining your monthly payments. Even one percentage point in your interest rate can mean a difference of a hundred dollars or more. As my appreciation of mortgages grew, so did my desire to learn more about them.
I learned the difference between fixed and variable rates. As I understand it, a fixed rate is an amount that is “locked in” for the length of your term. This type of rate is attractive for people who need certainty with their finances. Knowing exactly how much you will be paying every month for the next five years is quite important when planning your budget. Variable rates, however, can offer a lower percentage of interest at the onset of your loan. The drawback is that the rate is tied to your bank’s prime rate, which itself is dependent on the economy. In short, you may get a better deal, but it is impossible to know for certain.
I also discovered that there are closed and open loans as well. In essence, a closed loan will only allow you to pay your predetermined monthly payment. If you wish to pay off more of your loan in one lump sum (in the event of inheritance, for instance), you can be penalized. An open loan, on the other hand, will allow lump sum payments, which allows more flexibility in the event you start earning more money or if you have a good night at the blackjack table.
The last thing I will mention is the tools I have discovered while trying to find the best mortgage and home. There are many mortgage calculators available on the web or as apps on mobile devices. These tools are a great way to determine what you can afford in terms of house price and interest rate. You can play with the variables and figure out the best amortization period as well. There is even a mortgages calculator which will compare all the big banks’ rates for you in an easy to read table.
Over the last few years, there have been many changes in my life that have required me to shift my perspective on many things, the most important of which is owning a home. I have left the big city and now live in a rural part of the Maritimes with my long term partner. In the last few months, we have been actively discussing and planning on buying a home together. I have had to learn a great deal about how to finance for a home purchase. Of course, finding the best interest rate is top priority.
I never realized how big of a factor your interest rate is when determining your monthly payments. Even one percentage point in your interest rate can mean a difference of a hundred dollars or more. As my appreciation of mortgages grew, so did my desire to learn more about them.
I learned the difference between fixed and variable rates. As I understand it, a fixed rate is an amount that is “locked in” for the length of your term. This type of rate is attractive for people who need certainty with their finances. Knowing exactly how much you will be paying every month for the next five years is quite important when planning your budget. Variable rates, however, can offer a lower percentage of interest at the onset of your loan. The drawback is that the rate is tied to your bank’s prime rate, which itself is dependent on the economy. In short, you may get a better deal, but it is impossible to know for certain.
I also discovered that there are closed and open loans as well. In essence, a closed loan will only allow you to pay your predetermined monthly payment. If you wish to pay off more of your loan in one lump sum (in the event of inheritance, for instance), you can be penalized. An open loan, on the other hand, will allow lump sum payments, which allows more flexibility in the event you start earning more money or if you have a good night at the blackjack table.
The last thing I will mention is the tools I have discovered while trying to find the best mortgage and home. There are many mortgage calculators available on the web or as apps on mobile devices. These tools are a great way to determine what you can afford in terms of house price and interest rate. You can play with the variables and figure out the best amortization period as well. There is even a mortgages calculator which will compare all the big banks’ rates for you in an easy to read table.