Friday, March 28, 2014

2.99% 5 Year Fixed Rates Back in the Spotlight!


Rates are back in the spotlight and the media can't get enough of it. 

Mortgage Brokers like myself have had access to 2.84-2.99% 5 year fixed rates for weeks now, but since BMO announced their 2.99% 5 year fixed rate clients have been contacting me about "rates coming down". Also, it is important to note that just because a 5 year fixed rate comes down, does not mean that variable rates will necessarily drop at the same time. 

Even with these low fixed rates being available I am still recommending a variable rate currently because there are some low low variable rates putting you currently at a rate as low as 2.35%. You can keep your payment the same as if you locked into a fixed rate and you will in turn pay down your mortgage faster! More money in your pocket and less money in interest! Then lock into a fixed rate when/if the Bank of Canada increases the rate and prime rate is on the rise.

There are sub 3% rates out there right now, but remember not all mortgages are created equally. Some important questions you need to ask your Mortgage Broker or Bank:
  • What are the prepayment privileges?
  • What is the amortization limit? 25 years?
  • Can I port or can I port and increase? Do I need to sell my house to discharge the mortgage inside of the term?
  • Penalty calculation - Their discounted rate is how high?
  • Which means my penalty will be $$'s - crazy!
  • Can the mortgage be paid out? Bona fide sale?
  • Will I receive competitive renewal rates?
  • Are there no payment vacations or breaks?
Yes, a restrictive mortgage at 2.99% may be a good fit for a few people out there, but the difference in monthly payments between 2.99% and 3.09% can be just $12/mth whereas the 2.99% may end up costing the client thousands in the long run if they come across one of these restrictions.

Also many of my clients just see a low rate and want to lock in, but it is important to think about the bigger picture. Here are some questions you need to ask yourself:
  • Will I be selling my home within that 5 year term?
  • Will I be getting married? Having a baby? 
  • Will I be getting a promotion? or could I possibly loose my job? or change careers?
  • Do I plan to buy a house and need to increase my mortgage dramatically? Will I qualify? Will I need to extend my amortization to 30 or 35 years to qualify for a larger mortgage to buy that dream house?
Lots of things to think about when comparing mortgages!  

This is where a Mortgage Broker differs from a big bank. I am here to help you understand the mortgage terms, policies, and penalties as well as discuss the bigger picture with you and your family to ensure we make a plan for the future.

Please feel free to call me to discuss your mortgage needs. 778.388.4240 or laura@cleverlending.com