In Ontario, a fixed mortgage rate is a mortgage where the interest rate stays the same for the term of the mortgage loan.
A fixed rate mortgage is a safe option because you know that your mortgage payment will not change during the term of the mortgage. Families who live on a tight budget are better suited to a fixed term mortgage as it ensures that there are no surprises.
A fixed rate mortgage usually bears a slightly higher interest rate then a variable rate mortgage. The interest rate is fixed based on the term of the mortgage so the shorter the term, the lower the interest rate.
Banks and other major financial institutions generally want customers to lock into a 5 year fixed rate mortgage because it yields them the most interest and it is locked in, so they know that the customer is theirs for at least 5 years.
Now as I mentioned, it all depends on you, your budget and your lifestyle. If you are living on a tight budget, don’t plan on moving for the next 5 years and want to guarantee your mortgage and interest rate, a fixed rate mortgage is right for you.
On the other hand if you have lots of surplus cash flow in your budget, low debt and want to pay off your home fast, opt for a variable rate mortgage which generally carries a lower interest but also comes with the risk that if mortgage rates go up, yours will too!
Whether you chose a fixed rate mortgage or a variable rate mortgage, if you want to pay off your mortgage quickly, outside of choosing the type of interest, you can also do other things to speed up the process of paying down your mortgage.
You don’t have to choose a 30 year amortization. Did you know that reducing your mortgage amortization by 5 years will only increase your mortgage payment slightly but will save you 10‘s of thousands in interest?
Also consider accelerated mortgage payments as another way to pay more to your mortgage principal.
When planning for a mortgage, always consider the benefits and risks to the mortgage products you are considering so that you make the most informed choice. It's not always about the lowest Ontario mortgage rates. It's also important that you commit to a mortgage you can afford to repay, at terms you can live with. For more information about fixed rate mortgages please visit http://www.gtamortgagematters.com/
Showing posts with label mortgage rates. Show all posts
Showing posts with label mortgage rates. Show all posts
Monday, August 29, 2011
Monday, August 22, 2011
Ontario Mortgage Rates - Part 4 --- How to Get Approved for a Mortgage at the Lowest Mortgage Interest Rate
If you are looking to purchase a home you must be thinking about how to get approved for a mortgage at the lowest possible mortgage interest rate. Different lending institutions offer different mortgage interest rates to applicants based on the risk that they represent as a potential client.
Usually financial institutions that offer CMHC mortgage insurance offer the lowest interest rates. That is because if your mortgage is CMHC insured and you default, CMHC will pay the bank for any shortfall. That’s not to say that CMHC won’t try to collect the money back from you in the future.
This means that if you want to get approved for a CMHC insured low interest mortgage you will have to satisfy CMHC’s requirements as well as the banks. Both CMHC and the bank have common criteria.
1. You must be able to prove your income.
2. You must demonstrate stability.
3. Your income to debt service ratios must be in line.
4. You must have the minimum required down payment.
5. You must meet their credit score requirements.
Generally a financial institution will want to see that you have had the same income source for the past 3 years. They will sometimes request your tax assessments as evidence. If you are employed they may ask for a job letter and paystub.
Your debt service ratios consist of two numbers, your GDS and TDS. Your TDS is your “total debt service ratio” This is the amount of your monthly income that is consumed by your housing payments and payments to debt divided into your gross monthly income expressed as a percentage. CMHC and most lenders will require that your TDS does not exceed 42% (with your new mortgage).
Your GDS is your “gross debt service ratio” which is the amount of your monthly income that is consumed by your housing payments alone, against your gross monthly income, expressed as a percentage. CMHC and most lenders will require that your GDS does not exceed 32% (with your new mortgage).
You must be able to prove that you have the required down payment or if you are refinancing, that you have the sufficient equity.
Finally, the minimum credit score required to be approved for a mortgage at a bank is 680. Set that as your benchmark if you want to get approved for Ontario’s lowest mortgage interest rate. For more information about how to get approved for a mortgage at the lowest mortgage interest rate please visit http://www.gtamortgagematters.com/
Usually financial institutions that offer CMHC mortgage insurance offer the lowest interest rates. That is because if your mortgage is CMHC insured and you default, CMHC will pay the bank for any shortfall. That’s not to say that CMHC won’t try to collect the money back from you in the future.
This means that if you want to get approved for a CMHC insured low interest mortgage you will have to satisfy CMHC’s requirements as well as the banks. Both CMHC and the bank have common criteria.
1. You must be able to prove your income.
2. You must demonstrate stability.
3. Your income to debt service ratios must be in line.
4. You must have the minimum required down payment.
5. You must meet their credit score requirements.
Generally a financial institution will want to see that you have had the same income source for the past 3 years. They will sometimes request your tax assessments as evidence. If you are employed they may ask for a job letter and paystub.
Your debt service ratios consist of two numbers, your GDS and TDS. Your TDS is your “total debt service ratio” This is the amount of your monthly income that is consumed by your housing payments and payments to debt divided into your gross monthly income expressed as a percentage. CMHC and most lenders will require that your TDS does not exceed 42% (with your new mortgage).
Your GDS is your “gross debt service ratio” which is the amount of your monthly income that is consumed by your housing payments alone, against your gross monthly income, expressed as a percentage. CMHC and most lenders will require that your GDS does not exceed 32% (with your new mortgage).
You must be able to prove that you have the required down payment or if you are refinancing, that you have the sufficient equity.
Finally, the minimum credit score required to be approved for a mortgage at a bank is 680. Set that as your benchmark if you want to get approved for Ontario’s lowest mortgage interest rate. For more information about how to get approved for a mortgage at the lowest mortgage interest rate please visit http://www.gtamortgagematters.com/
Monday, August 15, 2011
Ontario Mortgage Rates - Part 3 --- When are mortgage rates going up?
When are mortgage rates going up? This seems to be the question on everyone’s mind, especially those with variable rate mortgages.
Ontario mortgage rates change depending on the state of the economy. Interest rates can be affected by the local, national and global economies. The Bank of Canada sets the lending rates for Canada and then financial institutions calculate their interest rates based on that.
When unemployment rates are high and the economy is struggling interest rates will be lower. When the economy is stable and growing Ontario mortgage interest rates will go up.
There have been reports that the economy in Canada has been improving, however we still have a huge manufacturing sector. So as our dollar increases, the currency exchange rates make manufacturing products here less affordable.
When you boil it down, a stronger Canadian Dollar is a bad thing for Canada’s manufacturing sector. Add to it other financial turmoil, for example If Greece fails, and the end result will be an even stronger Canadian Dollar. On top of that, if the United States doesn’t get their finances in order, the Canadian Dollar will see a further surge upward.
Sometimes the Bank of Canada can raise their interest rates 2 or even 3 times and you may hear that the economy is improving but that doesn’t always mean that interest rates are going to go up. In fact we think that they are going to stay the same, or even go back down depending on what happens with Greece.
The good news is, the time is right to seize the day while Ontario mortgage rates are still at historic lows. Not only is it more affordable than ever to purchase a home, if you already own one, there are lots of ways that you can still take advantage of these low Ontario mortgage rates.
You can obtain a home equity loan to consolidate debt and work towards becoming completely debt free. You could complete a long overdue home renovation or purchase a vehicle. The sky is the limit. If you were planning a big ticket purchase your home is a great way to raise money to finance it at low interest rates.
It’s hard to predict when Ontario mortgage rates are going to go up so the best thing to do is obtain the right mortgage that works within your budget, so that if mortgage rates do go up, you are prepared. For more information about when Ontario mortgage interest rates are going up please visit http://www.gtamortgagematters.com/
Ontario mortgage rates change depending on the state of the economy. Interest rates can be affected by the local, national and global economies. The Bank of Canada sets the lending rates for Canada and then financial institutions calculate their interest rates based on that.
When unemployment rates are high and the economy is struggling interest rates will be lower. When the economy is stable and growing Ontario mortgage interest rates will go up.
There have been reports that the economy in Canada has been improving, however we still have a huge manufacturing sector. So as our dollar increases, the currency exchange rates make manufacturing products here less affordable.
When you boil it down, a stronger Canadian Dollar is a bad thing for Canada’s manufacturing sector. Add to it other financial turmoil, for example If Greece fails, and the end result will be an even stronger Canadian Dollar. On top of that, if the United States doesn’t get their finances in order, the Canadian Dollar will see a further surge upward.
Sometimes the Bank of Canada can raise their interest rates 2 or even 3 times and you may hear that the economy is improving but that doesn’t always mean that interest rates are going to go up. In fact we think that they are going to stay the same, or even go back down depending on what happens with Greece.
The good news is, the time is right to seize the day while Ontario mortgage rates are still at historic lows. Not only is it more affordable than ever to purchase a home, if you already own one, there are lots of ways that you can still take advantage of these low Ontario mortgage rates.
You can obtain a home equity loan to consolidate debt and work towards becoming completely debt free. You could complete a long overdue home renovation or purchase a vehicle. The sky is the limit. If you were planning a big ticket purchase your home is a great way to raise money to finance it at low interest rates.
It’s hard to predict when Ontario mortgage rates are going to go up so the best thing to do is obtain the right mortgage that works within your budget, so that if mortgage rates do go up, you are prepared. For more information about when Ontario mortgage interest rates are going up please visit http://www.gtamortgagematters.com/
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