Tag Archives: mortgages

Types of Mortgage Products

Fixed Rate
A fixed rate mortgage is one of the most stable mortgage types. The interest is determined and is set for the term of the mortgage, and homeowners pay one fixed amount throughout the term. The borrower’s monthly payments for interest and principal remain the same for the duration of the loan regardless if Canada prime rate increases. These mortgage rates do not fluctuate as long as the borrower is in a term agreement. The three most common durations to lock-in interest rates are the 1, 3 and 5 year terms.

The advantage of fixed rate mortgages is that you know exactly how much your mortgage payments are regardless of whether rates rise or fall. This makes for easier budgeting and is less risky than a variable rate mortgage. Fixed rate mortgages are most desirable when current interest rates are low.

Variable Rate
The variable rate, which can also be called an adjustable rate mortgage or ARM, is the opposite of the fixed rate in that the interest rate may change during the

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Rising Interest Rates

There are two different types of interest rates: the Prime interest rate and fixed rates (or long-term rates). The Prime interest rate, which the Bank of Canada (BoC) controls, is what gives us our variable interest rate. The focus of the BoC is on stimulating the economy and keeping the inflation rate low. The best way to stimulate the economy is to get people to spend money, thus, the low interest rate. Now that the economy is nearing full recovery, inflation can become an issue, so to keep it in check the BoC will start to raise the prime interest rate. This is the rate the banks pay to borrow money.

Fixed rates, on the other hand, are based on the bond markets and although what the BoC does with the prime rate has an impact on the fixed rates, the two act independently of each other. The Bond market, like all markets fluctuate daily.

So the challenge for homeowners is to look at the rates in rational manner and not overreact to the headlines. Is the best advice to lock in t

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Cash Back Mortgages

Some lending criteria didn’t change. Financing is still allowed up to 95% of the value of the home, and condo fees are calculated the same way – only half are used to determine your total debt. You can still borrow your down payment and many lenders still offer the 5% Cash Back mortgage. With a Cash-Back mortgage, the client receives a rebate on their mortgage at the time of closing of the mortgage. This rebate varies anywhere from 1% to 5% of the mortgage amount depending on the lender and term chosen. The money from a Cash-Back mortgage is especially handy for the first time buyer who needs extra funds to purchase home improvement items such as blinds, carpet, appliances, or even furniture. Thus, first time buyers are the number one consumer of Cash-Back mortgages in Canada.

This is also an option for first time home buyers who have the minimum down payment. You can get the cash you need to help pay your land transfer tax, lawyer’s fees, moving costs, closing costs and other expens

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