There are different types of mortgage rates, and they vary in terms and conditions. Every mortgage is unique and caters to each p particular needs. To get the best mortgage to suit your financial needs, you will need to compare all of your options.
Open mortgage
The plan is flexible, and it allows the borrower to pay the mortgage balance at any moment throughout their payment period. The drawback is, you will pay premiums with higher rates.
Closed mortgages
The plan has lower rates; however, it has a restriction on the principal amount to be paid each year. If the entire principal is made before the set term, a prepayment penalty of a 3-month interest is charged.
Fixed vs. Variable rate mortgages
A Fixed rate is constant all through the mortgage period, which is usually five years; however, a Variable mortgage rate changes when the lender’s prime rate changes. Fixed mortgage rates are more popular with almost all mortgages in Canada, it protects the buyer against interest rate fluctuations, and all your payments remain constant throughout the payment period. Variable rates are lower than the fixed mortgage rates and vary over the payment period. They are usually affected by the market changes, thus changing your payments over time. Variable rates are risker than fixed rates.
A credit score is essential as it will be the deciding factor on if you will qualify for a pre-approval and how much you can get if you’re pre-approved.