Fixed or Variable Rate Mortgages - Which one is best for you?
As far as mortgage loans go trying to decide which is best for you can be a pretty tough decision at times.Which is best for you
,a variable rate mortgage or a fixed rate mortgage? Like everything else, each has its pros and cons. If the rates are low and you feel that they may rise and it might be wiser to lock in for a five-year term or more. If they have been going up and down recently and you like the fact that they seem to be dipping lower than the fixed rates available at the time, then you might want to consider a variable loan.
A variable mortgage loan is most attractive while the rates seem to be tracking downward so it just makes sense to ride them all the way to the bottom and that perhaps lock in again when you feel that it's hit bottom. This of course is a guessing game and no one really knows what will happen next.
A fixed rate loan, for those who don't know, is where the rate is set for a specific period of time, usually from one to five years at the end of that term renegotiated for another term of one to five years. Most people lock in for a five-year term so this means that once its locked in, say iat3 or 4%,its stays at that percentage and doesn't change regardless of what the market is doing. For example if market rates goes up to 4% and your at 3%, your rate stays at 3%.
You might get a split rate loan some lenders offer where they will give you the best of both worlds. Part of your loan can be a fixed rate and part can be floating as a variable rate it might be 4060 split where you'll have 40% fixed rate is 60% variable or vice versa. Or the drawbacks with this type of split loan is that the lender they penalize you if you want to change your fixed rate amount. It's always prudent to shop around; Ottawa mortgage rates are always very competitive. When looking for Ottawa mortgage rates always check the current rates on a mortgage calculator to make sure you are getting the very best rates.
Finally, always compare the mortgage rates that the banks are offering and compare those rates to what your mortgage broker is giving you.
Fixed or Variable Rate Mortgages - Which one is best for you?
By: George Ferguson F.I.C.
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