According to available statistics, 66% of mortgages in Canada are fixed rate, while the rests are variable rate mortgages and other variants of mortgages.
What Your Need To Know About Fixed Mortgage Rates
Fixed Mortgage Rates Montreal
For many homeowners in Montreal, buying a house is not possible without taking a mortgage, and the most preferred mortgage for many people is the fixed rate mortgage. According to available statistics, 66% of mortgages in Canada are fixed rate, while the rests are variable rate mortgages and other variants of mortgages. You might be planning to take a fixed rate mortgage for your home too, but what is a fixed rate mortgage? Many people don’t have a clear understanding of these terms and only opt for an option because their friends did the same thing. Your Montreal mortgage broker will discuss the details of each option with you, but here is a brief write-up on what a fixed rate mortgage is all about.
What is a fixed rate mortgage?
In a fixed rate mortgage, you get a loan with an interest rate that does not change for the term of the mortgage. This means that irrespective of the fluctuations in the interest rates, you will continue to repay a constant amount of money for your mortgage till the end of the term. The term is a set period for which you will pay an agreed sum of money at a given interest rate. Fixed rate mortgages can have terms ranging from six months to over ten years.
People opt for the fixed rate mortgage because they are sure of what they will be paying for the mortgage term, an essential for many young families who have a limited source of income to finance their living. The most popular fixed rate mortgage is the 5-year term mortgage, and currently, the best 5-year fixed rate for Montreal is 2.84% from True North Mortgage.
Pros of Fixed Rate Mortgage
It provides stability, as you can plan your finances without any fear of hikes in your mortgage repayments.
It is more reliable than a variable rate mortgage.
Cons Of Fixed Mortgage
A fixed rate mortgage is expensive compared to a variable rate mortgage. You pay a higher price for protection against rate fluctuations.
Is a Fixed rate mortgage desirable?
This depends on many variables such as your source of income, your credit rating, family, commitments at home, job stability, and so much more. Seek the professional opinion of an experienced Montreal mortgage broker, and you will have answers to all your questions.
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Considering A Fixed Mortgage
When considering a fixed rate mortgage from Montreal Mortgage Brokerage you also have a more in depth choice of an open, closed or convertible fixed rate mortgage. We enable you to select a term and interest rate based on your needs and capabilities that provide you with a high level of security.
One of our mortgage experts will help you to decide which mortgage option is best for you, or help you save on an existing mortgage. Contact Montreal Mortgage Brokerage to get a consultation on choosing the right mortgage rate.
Open Term Mortgages
Open term mortgages are more appealing to people that plan to pay off their mortgage in the nearby future, are considering to sell their home, want to make a significant pre-payment (at any time, without charge), or feel that rates will decline. Overall, open fixed rate mortgages offer the most flexibility but come at a higher interest rate. Also, you are able to switch to another term whenever you’d like, free of charge.
Closed Term Mortgages
If you’re not planning to pay off your mortgage in a short term, a closed term mortgage is most likely the best option. Everything – your interest rate, payments and your term of choice, are completely fixed. This choice relieves you of having to worry about any changes, such as rates rising.
With closed term fixed mortgages you will be able to save on interest costs and payoff your mortgage more efficiently through a consistent method. In comparison to an open fixed mortgage, a closed mortgage offers a lower rate for the same term.
Let’s you convert to a closed term of one year or longer at any time, without charge. This product may be for you if you want to keep your options open and want a lower rate than an open mortgage of the same term. Your prepayment privileges are less flexible than those of an open nature.