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What Your Need To Know About Fixed Mortgage Rates
What Is A Fixed Rate Mortgage?
A fixed rate mortgage is a type of mortgage where you pay a constant amount for the duration of the repayment period, which is known as the mortgage term. A fixed rate mortgage is the most popular type of mortgage only because it offers protection against any fluctuations in the interest rates of the lending bodies.
Fixed rate mortgages are available in 6-month to over 10-year terms. The most subscribed term is the 5-year fixed rate mortgage.
Should You Pick A Fixed Rate Mortgage?
Your choice will depend on many factors. Do you have multiple streams of income? Are you raising a family? Can you tolerate risk? Many of these questions concern your financial standing and other commitments that will be met from the source of income you intend to repay your mortgage.
An experienced Ottawa mortgage broker will tell you more about the best option after considering your credit score, financial status, and other essential details about you.
Fixed Mortgage Rates in Ottawa
A fixed rate mortgage is the most popular method of property financing used by many Ottawa residents and Canadians in general. Buying a home in Ottawa is more affordable than in most Canadian cities, as the rates are quite lower, and the houses considerably cheaper. Ottawa is Canada’s capital city, and one of the best places to live in the world. It’s residents top Canada’s most educated list, and it is a favourite destination for many tourists all over the world. With the right type of mortgage plan, your dream of owning a beautiful house in the capital of Canada is within your grasp.
Fixed Mortgage Rates May Be More Expensive
In Canada, fixed-rate mortgages are a popular form of loan for home purchases, especially for a five-year term. However, fixed rate mortgages may sometimes end up being more expensive than an adjustable mortgage rate especially for much longer terms. Everything depends on the market. Although variable mortgage rates are lower, they are definitely more risky. Even if rates are remarkably low at the time that you commit to a variable mortgage rate, they may double in the following years. (Read more about variable mortgage rates here).
Disadvantages of A Fixed Rate Mortgage
- It is more expensive than the variable rate mortgage, as you are paying a premium for protection against rate hikes.
- You might not be able to access low rates if the rates become lower during the term of the mortgage. You can break your contract earlier if you want to do this, but you will be penalized for it.
Benefits of A Fixed Rate Mortgage
- A fixed rate mortgage is reliable, as it is not affected by rate fluctuations.
- A fixed rate offers stability, which gives you peace of mind when budgeting for other financial commitments.
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Considering A Fixed Mortgage
When considering a fixed rate mortgage from Ottawa 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 Ottawa 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.