Low Mortgage Rates and Your Mortgage

Mortgage interest rates are currently at historically low levels, and that means interest savings for mortgage consumers. However, with these low rates comes some concern and speculation from current and potential home owners…

With interest rates as low as they are, it’s tempting for a lot of current mortgage holders to refinance and benefit from these lower rates. Before deciding whether a refinance is the best thing for you, however, it’s a good idea to speak to a mortgage broker to determine such things as whether your prepayment penalty will be less or more than your interest savings. You don’t want to refinance if it’s going to cost you more than you’ll save! (especially after legal fees, title transfer, etc.)

For those of you that are planning on purchasing a home in the near future (whether you’re a first time home buyer or on your second or third property) is qualification after your mortgage term ends. With today’s historically low interest rates, home buyers can qualify for more of a loan. But what happens five years down the road when it’s time to renew? Interest rates may have increased and you’ll no longer qualify for your mortgage amount. To keep this from happening, your mortgage broker can qualify you on a higher interest rate, or place your amortization at 25-years so you still have room to extend the amortization to 30- or 35-years upon renewal.

Lastly, many people are concerned – especially with the word “recession” floating around – that since interest rates, they can increase significantly like they did in the 1980s. While this is a possibility, it’s an unlikely one, especially since the Bank of Canada has learned what not to do in situations such as the one we’re currently faced with.

Overall, despite the current economic instability, the mortgage industry is still strong and mortgage brokers are able to provide solutions to economy-related mortgage problems. If you have any questions or concerns that weren’t addressed here, please contact your mortgage broker.