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Higher Interest Rates Affect the Cost of Credit in Mississauga
At Certified Mortgage Brokerage Mississauga you will be given the best mortgage rates.
A decade of low-interest rates came to an abrupt end in 2017, a year in which fixed interest rates in Canada rose by almost 1%. This was the biggest annual rise in fixed interest rates in decades, and interest rates have been raised again in 2018.
Higher interest rates will affect the ability of many of the residents of Mississauga to buy the house of their choice as these rates are used as a basis of the dreaded stress test. Would be homeowners have not had to qualify for mortgages at rates as high as those applied in the stress test for the last ten years.
Mortgage applicants are always on the lookout for the best mortgage rates. None more so than now but beware do not be tempted by the cheapest rates available. Read the small print, or you could end up paying more than you bargained for.
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|First National Financial|
|Street Capital Bank|
1.88%(prime - 0.35%)
2.6%(prime + 0.15%)
|Line of Credit||Starting at |
|Equity Loans||Starting at |
|Private Mortgages||Starting at |
The Best Mortgage Rates May not be the Cheapest
The best mortgage rates may not always be the cheapest. The lowest rates often come with restrictions that can cost a pretty packet over time. Typically, mortgages are taken over extended periods and the loss of flexibility could have costly consequences.
Before signing the agreement consider the possible personal and vocational changes that could occur over the term of the contract and use this as a guideline for accepting or rejecting restrictions on the mortgage.
The best mortgage rate is the lowest rate that offers you, the borrower, the conditions and features that you want. Your Mississauga mortgage broker can do simulations for you so that you can evaluate the financial effect of penalties and restrictions against the projected interest rate savings,
Listed below are the conditions and restrictions that affect the interest rates. Prior knowledge of how they combine to affect the interest rates can help you to achieve a balanced contract,
- The term of the mortgage – is an important determinant of interest payments,
- Fixed or variable rates – Since interest rates are unpredictable many borrowers fix their interest rate over five years. If you can take the risk of higher interest rates you can negotiate variable rates at as little as prime less 1.25%.
- The purpose of the investment – You will pay lower rates for the primary home than for you plan to rent out.
- The Loan to Value Ratio – The higher the LVR, the more you’ll pay
- The location – Properties in great locations carry less risk to the lender as he will easily dispose of it if the borrower defaults
- Prepayment Restrictions – If you agree to prepayment restrictions you will pay less, but you will pay penalties for terminating early.
- Portability – Even if you pay a bit more it is worth ensuring that the mortgage can be transferred to another home
- Proof of income – If you can adequately prove your income you will pay less
- Credit Rating – the better your credit rating the less you’ll pay.
- Stress test failure – If you fail the stress test, your only alternative will be a private mortgage at higher interest rates.
- Pre-approval – You’ll pay a little more for pre-approval.
- Property purchase price of over a million dollars attracts higher interest rates.
Whilst your personal circumstances and the property both have a major effect on the interest rates that you are able to negotiate, you should carefully consider the restrictions placed on the cheapest interest rate options, or you could end up paying more than you had bargained for.
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