There’s Never Been a Better Time to go with a Variable Rate Mortgage
By Roy Cocciollo
As your mortgage broker, I am already sending you a monthly email newsletter to keep you up to date on the market. But the current mortgage rate news needs special attention. Yet another bank discounted their variable mortgage rates last week. Meanwhile, Canada’s largest lenders all raised their benchmark posted 5-year fixed mortgage rates, signaling a rise in borrowing costs. You are likely asking: “What’s the impact on my variable rate mortgage?”
The bottom line: The Prime Rate would have to increase 4 times to get the current variable rates to exceed the current fixed rates. If you have a variable rate mortgage at prime -60 or less, you should give us a call, because I have access to lower rates.
Let’s compare these two rates and the impact on the interest:
In the example above, paying the penalty outweighs your overall savings in interest paid.
Big banks have a different strategy in mind. Instead of offering their clients the best rates to keep your loyalty, they are making it more difficult for you to qualify somewhere else (thanks to the stress testing that came into effect this year).
And if your mortgage is up for renewal this year, here are some things to do:
1. Start looking at your options as soon as possible to make sure nothing is getting in your way of securing the best mortgage.
2. Don’t just sign your bank’s initial renewal letter. Evaluate and negotiate.
3. Consider all the factors, not just the rate. Understand all your mortgage terms including portability, prepayment privileges and penalties.
REMEMBER, the best time to negotiate is when you are renewing your mortgage. Let your current lender EARN your business at every renewal. The application process is not very difficult and doesn’t take up too much time. Start early and reach out to the right Mortgage Agent or Broker, get the knowledge you need to make an informed decision.
Remember, we can shop your mortgage to more than just one bank (including your existing one).
Forward this blog to friends and family, or just hit reply to this email – I am ready to help. Let’s start with a quick analysis of your situation.