This type of interest rate is tied to the banks prime rate. The banks prime rate fluctuates up or down with the overnight rate set by the Bank of Canada. A variable rate can typically be locked into a fixed rate once during the term of the mortgage without penalty.
This type of interest rate is locked in for a length of time and is usually higher than a variable rate. Essentially, you are paying extra for piece of mind. The payments, including the amount of interest that you owe will not change during the term of the mortgage. Fixed rates are determined by supply and demand in the bond market which is determined by world events. This is why it is hard to predict where rates are headed in the future.
This type of interest rate is tied to the banks prime rate. The banks prime rate fluctuates up or down with the overnight rate set by the Bank of Canada. A variable rate can typically be locked into a fixed rate once during the term of the mortgage without penalty.
This type of interest rate is locked in for a length of time and is usually higher than a variable rate. Essentially, you are paying extra for piece of mind. The payments, including the amount of interest that you owe will not change during the term of the mortgage. Fixed rates are determined by supply and demand in the bond market which is determined by world events. This is why it is hard to predict where rates are headed in the future.
Your payments consist of principal and interest. Early on in the mortgage you will be paying more interest than principal. Your lender may also collect property taxes with your payments and pay them on your behalf.
A pre-approval lets you know the maximum mortgage amount you can afford based on the information you provide about your income and debt levels at the time of the pre-approval. It also holds a rate for you up to 120 days. If rates increase during that time, you will still get the lower rate if your mortgage closes within that 120 day window. Any material changes to your income, credit and/or debts prior to purchase will affect your pre-approval. Please note a pre-approval is not a guarantee that you will get a mortgage, as it is conditional on you providing income, as well as other documents to support your initial application, as well as the approval of a mortgage default insurer such as CMHC if applicable.
This means that either your monthly payment will increase because you will now be paying more interest on your mortgage, or the payments will stay the same but more of the payment will be applied to the interest and thus, you will end up making payments for a longer period of time.
This depends on your individual situation. If you have 20% or more for a down payment, you will not require mortgage loan insurance and you will qualify for a conventional mortgage. If you have less than 20% down payment, this is called a high ratio mortgage and you will need to purchase mortgage loan insurance (which can be capitalized into the mortgage with the exception of the PST portion). For this type of mortgage, you will need to qualify based on the lender and mortgage loan insurers guidelines. The larger the down payment you have, the less you will need to borrow and the less interest you will pay.
© Mortgage Experience | 2019 – All Rights Reserved.
© Mortgage Experience | 2017 – All Rights Reserved.
