Tag Archives: Refinance

Fixed Rate Mortgage or Variable Rate Mortgage?

 

Before we answer that question, it’s important to understand the difference between a fixed rate mortgage and a variable rate mortgage.


Fixed rate mortgage – A fixed rate mortgage is a mortgage where the rate of interest is fixed for a specific period of time. Generally known as the mortgage term, it usually ranges from between 6 months and 25 years. As time goes on, more of the mortgage payment goes towards the principal and less of the payment goes to the interest.


Variable rate mortgage – A variable rate mortgage is a mortgage that has fixed payments, but the interest rate fluctuates with any changes in interest rates. If interest rates go down, more of the payment goes to principal and if interest rates go up, more of the payment goes towards the interest.

So, which one is better?

Determining which one is better is as simple as looking at your ability to handle risk…


Here’s an easy test…

If you lose sleep worrying about the possibility of a .25% increase in the interest rate or get stressed thinking about the impact on your monthly budget if your monthly mortgage payment changes, then a fixed rate mortgage is for you.

You should also take the same test when choosing the length of the fixed rate mortgage term. If you breathe easier knowing that your mortgage payment is fixed for the next 5 years then a 5 year term is right for you.

It’s pretty simple, if you don’t like risk, then a fixed rate mortgage term is right for you.

Now if risk is not as much of an issue, then a variable rate mortgage is the way to go. Here’s why…

Based on a detail study completed by Moshe AryeMilevsky of interest rates from 1950 to 2000, consumers are better off, on average, financing a mortgage with a short term floating (prime) interest rate, compared to a long term fixed rate mortgage. A consumer with a $100,000 mortgage and an amortization period of 15 years would have paid $22,000 more in interest payments by borrowing and then renewing at the 5 year rate as opposed to borrowing at prime and renewing annually.

The bottom line:

Long term stability has a price, but if you can’t sleep, what good’s the money?

Don’t forget if you, a friend or family member have any questions about mortgage financing we are here to answer those questions and to work with you to arrange the best product to fit your specific needs and comfort levels.
Contact FamilyLending.ca for more information.

Future Buying Plans

 

Thanks for letting us represent you with your mortgage requirements. We hope you’re happy for years to come…Once we get a client, we want to have them for LIFE! We want to be the people you’ll always think of when you think of Mortgage needs. So whenever you think you might be ready to buy an investment property, do a home renovation or go on that much needed vacation, just call or email an agent and we’d be happy to help.Our promise to you is that when we can help, we’ll show you all the options, and if we can’t, we’ll explain why and work with you to accomplish the goal or connect you to someone who can.  So if you hear that any family or friends are looking for mortgage products please recommend us and let us know about their plans. We promise to provide them with the same high-quality service we gave you.

Thanks again for your support, and I hope the years ahead reinforce the confidence in the decisions you’ve made.

Contact FamilyLending.ca  for more information.

Consolidate Your Debt and Save!

 

Looking for a simple way to pay off credit card debt quicker? The key to getting rid of debt is to commit to fixed, not declining, monthly payments and finding a better interest rate.

Here is an example.

Lets say your credit card has an interest rate of 19.75%. If you were to attempt to pay off a debt of $30,000 with fixed payments of $600 per month, that debt would be paid off in just under 9 years. Your total interest cost would be approximately $34,356.

Take out a loan with an interest rate of say 6% and that same debt would be paid off in just under 5 years, almost 4 years sooner than the same debt you’ve accumulated with the credit card. Best of all your interest cost will be reduced from $34,365 to $4,634, that’s almost a $30,000 savings.

In the real world, of course, your debt may not reside on one, but multiple credit cards. The practice of transferring all of your debt to a single loan is called debt consolidation.

 

Here’s how it works:

1. Add up all your credit card debt.

2. Take out a single loan for the total amount.

3. Use the proceeds of the loan to pay off all your credit cards in full.

4. Pay off the loan in single monthly payments, the interest rate will be considerably less than what you would pay on a typical credit card.

The key here is to pay off debts, if you just get new cards or rack up the balances again this can very quickly spiral and eat up the equity you have built in your home, so discipline is the key to success.
Contact FamilyLending.ca for more information.

Getting a Mortgage with FamilyLending.ca

Getting a Mortgage with FamilyLending.ca

Avoid the hassles and time that you experienced obtaining a mortgage on your previous home(s). Use a FAMILYLENDING.CA Mortgage Agent who can do all the work for you and get you a better rate and product to suit your needs. Although you already know the ropes, things may have changed since you were last in the market.

Renewal

Is your mortgage coming up for renewal? Don’t be too hasty in just signing the form and sending it back to the lender. Over 70% of mortgage holders do just that, and what is the usual consequence? A higher rate and a mortgage product that might not be best suited to their interests. Get a FAMILYLENDING.CA Mortgage Agent on your side today and let them do all the work for you – we will find you the best possible rate and product to suit your interests.

There may come a time when you want to renew/switch your mortgage to another lender who will most often give you a better rate. Most lenders now offer “no cost or low cost switches” and it’s a smart way to reduce your interest costs. FAMILYLENDING.CA can take care of all the details for you and help you negotiate with your existing lender or find a new lender who will give you very competitive rates.

Refinance

There are many reasons why you might want to refinance, or increase your existing mortgage such as to consolidate non-mortgage debt or to finance improvements to your home, etc. A FAMILYLENDING.CA mortgage agent can make it easier for you to negotiate with your existing lender or switch to a new lender who can give you a more favourable rate. There are many factors to consider when refinancing your mortgage. Here’s what you need to know:

Taking out equity in your home

•              Consolidate other debt

•              Renovations & home improvements

Consolidating existing financing

•              Combining mortgages

•              Breaking a closed mortgage to transfer to a new lender

Contact FamilyLending.ca for more information