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Choosing The Best Mortgage Rates In Canada

When you decide to apply for a mortgage, it is important to find out the best products available. By doing your research, you can get the most competitive lenders, brokers and banks in Canada. You can find out the lowest interest rates available, which will help you to identify a product that is suitable for your needs. Buying a home is likely to be the biggest investment that you will ever make and it is important to consider all the facts carefully before you take the plunge!

•    Comparing mortgage rates

Many people wonder why it is important to compare mortgage rates and the answer is simple- not all mortgage rates are the same. Mortgages often vary when it comes to the terms and conditions, as well as the interest rate. Just like it is not smart to buy the first car that you set your eyes on, you cannot settle on the first mortgage that you stumble across. Each mortgage is designed to cater to individual needs. To find the best mortgage, you should compare all the options available.

•    Open or closed mortgage

You should determine whether to get a closed or open mortgage. A Closed mortgage will often have lower rates compared to the Open mortgage and this makes it more popular. Closed mortgages come in either fixed or variable form and they have restrictions on the principal amount that you can pay each year. If you decide to pay off the entire principal before the set term on your closed mortgage, you will end up facing a penalty or interest charge.

If you choose an Open mortgage, you can pay off the entire mortgage balance any time within the loan term. This means that you can complete the mortgage payment early if you wish to do so without risking penalties. The downside of this plan is that you will have to pay a premium for this option. Most homeowners opt for an open mortgage if they are expecting a huge amount of money such as a bonus or an inheritance, or if they plan to move in the near future.

•    Variable verses fixed mortgage

It is important to find out the difference between variable and fixed mortgage rates. Fixed mortgages are the more popular option in Canada representing about 66% of all mortgages. When you opt for a fixed mortgage, you are protected from fluctuations in interest rates. Once the rate has been set, you can forget it! Your mortgage payment remains constant or the same each month for the duration of the loan term. You do not have to worry about surprises a few years down the road.

The variable mortgage rates tend to be lower than the fixed rates, but they can change or vary over the loan term or duration. Variable mortgage rates are affected by market behaviour and this tends to affect the payments. The fact that your payment amount is liable to change over time means that you can end up paying much more in the long term depending on the market forces. Unlike with the fixed mortgage the variable mortgage lacks stability.

•    Choosing the right lender

When you know the type of mortgage that is suitable for your needs, you need to look for the best lender. Choosing a lender can make a huge difference and it will determine the terms and conditions that you receive. It is important to deal with a reputable lender who will create a package that will work perfectly for your individual situation. Working with private lenders is the best way to ensure that you get more options and you can benefit from flexibility.

Find out the prepayment options and mortgage rate hold available from the lender so that you can get a flexible solution to suit your needs.