Canada Money CA

Few people have ready cash to pay for a property up front. So if you want to buy a property, you have to find a lender to loan you the money. To get the loan, you will be required to pay interest, and this will add substantially to the cost of your property. It is therefore important to shop around and compare mortgage rates to find the best rate you can.

A fixed rate means that the rate of interest stays the same throughout the period of the mortgage. So if the interest rate is five percent, you will be paying five percent throughout, and so your payments will be the same throughout the term. This offers the advantage of stability, since you know how much you will be paying for your house on a monthly basis, and need not be surprised by sudden increases.

A variable interest rate means that the rate will fluctuate depending on the rates of the central bank. The fact that this varies means that your payments can go up or down for each payment. You might end up paying less than you would for a fixed rate mortgage if the interest rates are low, but if they rise then you have to pay more. This kind of mortgage should not be taken by those who are on a tight budget and cannot tolerate increases.

Having a good credit history is important to get lenders willing to lend to you. If you have paid off all your credit cards reliably, then financial institutions will feel that you will pay them back their money. If you have had problems with your credit, then you will be regarded as a risk and the only people willing to lend you money will charge you exorbitant rates of interest.

Banks have posted interest rates, but those with good credit histories should be able to receive preferred rates. You can try to negotiate as good a rate as you can with the mortgage officer.

Mortgage brokers obtain money from multiple financial institutions at low rates, and re-lend the money to individual parties. Many brokers can offer rates better than those offered by banks, so they are worth a look. But it is better to consider their reputations. It is better to deal with those who are accredited and belong to a professional organization that guarantees certain standards.

When arranging the loan, there are many payment options to choose from. Making more regular payments will allow you to pay less. So making bi-weekly payments to your mortgage is better than making monthly payments, even though the amount you are paying is the same, because you are paying off the interest more quickly. You can also choose from different terms. Five years is the standard, but you can choose to renew it in as little as a year, or for as long as ten years.

Mortgage rates vary a lot between institutions, so you would be wise to shop around before choosing one. Since you are being loaned such a large amount of money, even a fraction of a percentage point could save you thousands of dollars.

Searching for a bank that truly cares about you? Try a bank that is reinventing neighbourhood banking today – they offer a great banking experience and have best mortgage rates and GIC rates.

Mortgage Rates FAQ:

Question: Your predictions about future 5 year fixed mortgage rates in Canada?
I really need to have some idea of what the fixed 5 year mortgage rates will be in 3 or 3.5 years. Right now they seem to be between 3.99% and 5.45%. In the future the rates will surely go up because Bank of Canada will have to slow monetary expansion and raise interest rates. So what do you think the fix. 5 year rates will be in 3-3.5 years? 7-8%? Or can it go up to all the way to 9-10% by 2013?

Answer: In the US, long term rates appear to be on an upward trend. Of course, it is impossible to predict with 100% accuracy. Just look at the US economy and consider whether rates can get any lower. Most economist think they will go up.

Question: How to negotiate best mortgage rate?
I’m a first time home buyer. What is the best way to negotiate mortgage rate? Is it good to get more than one pre approval from banks? If I get more than one pre approval, how badly it affect my credit rating?

Answer: Get one pre-approval from the lender who will offer you the best rate you can find. In order to receive the lowest interest rate, you must have excellent credit, a large down payment and few other liabilities. No negotiation – the rates are set by the lender based on what it costs them and the prevailing prime rate. You have to shop around for the lowest rate.

Question: Can I get a mortgage as a student here in canada?
I am a full time student. I already technically own my own condo (I say technically because my mother paid for it and it was just put under my name to get some tax cuts.) We didn’t take out a mortgage for this condo and paid for it in full. My question is, if I as a full time student, can get a mortgage to purchase another real estate property? I don’t have any student loans and my credit rating is 795. I have a part time job and earning rental income as well from the condo I “own”

Answer: Most likely, yes. If you can meet the lenders standards of 40% or less debt to income and have good credit, I’d bet yes. But depends on what you are buying, price, down payment, etc. Go to a good mainline lender and ask.

Question: I recently got married and am now thinking about investments. I have some ideas. Which do you think is best?
1. Purchase rental / investment properties in Wasaga Beach Canada. 5.25 to 6.95% mortgage rates. Have immediate family to maintain them / find and deal with renters.
2. Use a financial advisor to buy into EU funds. I have a friend who advises on this. Seems to be doing well.

Answer: All these ideas are off-the-wall unless you FIRST have:

1. An emergency fund of 8 months’ living expenses in cash, savings, money markets.

2. Maximized contributions to your 401k.

3. Have enough life insurance to provide for your family if you die prematurely.

4. Have adequate health insurance, homeowners insurance, auto insurance, and liability insurance.

5. Have a written will, living will, health care power of attorney and financial power of attorney.

After that, you can think about investing. Save 10-15% of your income every year. Don’t buy anything you can’t understand. Love the idea about rental properties, esp the ability to hand off day-to-day responsibility to your family and not do any work yourself.

Good luck. With your approach to risk-taking, you’ll need it!

Question: How much will interest rates go up to buy a house in the next 5 years in B.C. canada?
They are at an all time low so everyone is buying. There at roughly 3%. Were currently looking at getting our mortgage at 1100 a month with a fixed variable for 5 years. The house is after 15,000 down would be 335,000 canadian.

So we would like to know if anyone who reads the markets would possibly be able to tell us how much the interest rates could go up in the next 5 years. As most canadians know in the 80s is when people were losing their homes.

Answer: Nobody can answer this question… Too many economic variables. Don’t be surprised if fixed rates are close to 10% in 5 years from now. At that point you would want to switch to a variable rate. Historically variable rates have shown to be a better choice in the long run.

Question: Is it true that mortgage rates in Canada decrease at summer time every year and how much?

Answer: This is false. Mortgage rates are determined by the bond rates which are not seasonal at all.

Question: Are the mortgage rates dropping in ontario canada?
With the market dropping, it makes one wonder why the rate is at 6% for 5 years with banks still.

Answer: Perhaps mortgage rates depend to some extent on how risky it is to lend money. When the economy is not doing well. And there is more risk that some home owners will default on their loans. Then banks are reluctant to lend money. And banks decrease the demand for their loans by keeping mortgage rates high.

When banks begin to feel more confident about the economy and people’s ability to pay for their mortgages. Then they will start to decrease their mortgage rates.

No economic recession lasts forever. And there is a good possibility that mortgage rates may go down in a few years.

But how low the mortgage rates can go down also depend on the inflation rate. And if the inflation rate increases in the future. Then mortgage rates will likely go up from where they are today and not down, even if the economy starts doing better.

Question: If the Bank of Canada raises the prime lending rate, does that effect mortgage rates? ?
I have a fluctuating mortgage – NOT applying for a new one. Also, the U.S. have lowered interest rates by 1/2 points. How does THAT effect our mortgage rates?

Answer: Variable mortgage rates in Canada are usually set to adjust up and down with the bank’s prime rate. If the Bank of Canada rate were to rise, rates on your variable mortgage would certainly rise. Assuming your mortgage rate jumped from 5.25% to 9.8% (1% above prime), your monthly payment on $100,000 would jump from $596 to $881.

On the other hand if rates were to drop by 1%, from 5.25% to 4.25% (1% above prime), your monthly payment on $100,000 would drop from $596 to $540.

As we’ve seen in the news, banks do not have to adjust their rates the same amount as the Bank of Canada.

Random Posts