Tag Archives: Renewal

Open or Closed Mortgage?

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Open or Closed? Do you know which option is right for you?

Closed mortgages provide lower interest rates than open mortgages. Nonetheless, open mortgages include a smaller amount of fees.

What is a Closed Mortgage?

Closed mortgages cannot be prepaid, renegotiated or refinanced prior to maturation without paying a penalty. The majority of closed mortgages do provide a little flexibility by allowing you to pay back the principle through lump sum payments, or by enhancing your monthly payment amount for your best mortgage rate.

When to Consider a Closed Mortgage

Given that closed mortgages have considerably lower interest rates, they are more appealing to the average homebuyer.

When NOT to Consider a Closed Mortgage

If you believe that you will need to break your mortgage early.

What is an Open Mortgage?

Open low mortgage rate terms vary from 6 months to 1 year for fixed rates, and 3 to 5 years for variable rates. They may be settled prior to maturation without penalty.

When to Consider an Open Mortgage

If you are anticipating to get a large amount of money, an open mortgage will offer you the flexibility to settle your loan sooner.

The Beauty of Prepayments with Closed Mortgages

The majority of closed mortgages allow prepayment options, consisting of: lump sum payments as much as a portion of your annual principal, or enhancing your regular monthly Canadian mortgage rate payment.

How Much Does a Closed Mortgage Penalty Cost?

If you do choose to break your closed mortgage prior to completion of your term, you could possibly pay a penalty. The penalty you pay is the higher of either:

  • 3 months of interest
  • Or the Interest Rate Differential (IRD): the difference between today’s interest rate and the rate you currently pay

Refinancing Just Became a Whole Lot Harder

Ottawa’s latest round of mortgage policies could have quite the impact on current homeowners, especially those shouldering a large amount of debt. If you have a mortgage and are planning to refinance or renew in the coming months, you could be in for a bumpy ride. The two factors that will most impact your experience? Whether or not you plan to change your mortgage and your mortgage qualifications. Continue reading →

Which Term Is Right For You?

Before you set out to secure the lowest mortgage rate available, you’ll need to make an important decision concerning your payment term. Almost every new mortgage customer struggles when it comes to deciding their amortization schedule. While some customers prefer the lower monthly costs of a long-term mortgage, other’s want to pay off their loan as quickly as possible.

So, should you go for a short-term or long-term solution? Let’s look at your options. Continue reading →

Low Mortgage Rates = False Sense of Security?

Historically low interest rates are making it easier for Canadians to enter the real estate market. Why continue to rent when a mortgage payment could be less than your current monthly lease? If you’re considering the here and now, buying makes perfect sense. With the help of a seasoned mortgage broker, you can easily secure a best rate mortgage that’s cost-effective – but what happens when the market shifts and interest rates begin to rise? Continue reading →

A Review of 2011 Mortgage Trends

The Canadian mortgage market experienced a number of changes this past year. There were some ups and there were certainly some downs. The following are some of the biggest trends from the past year, and how we expect the market to unfold in 2012. Continue reading →