Mortgage Inquiries

Why should I compare mortgage rates?

Not all mortgage rates are created equal, or have the same terms and conditions. Each bank and/or lender caters to one type of individual. If you want to find the best mortgage for you, you need to compare all of your options.

Should I get an open or closed mortgage rate?

Closed mortgage rates are lower than their open counter parts, and are therefore most popular. Closed rates can come in fixed and variable form, but place a restriction on the amount of principal you can pay down each year. If you pay off your entire principal in a closed mortgage, you will face a penalty such as 3 months interest.

Open mortgage rates on the other hand allow you to pay off your entire mortgage balance at any time throughout your term and you pay a premium for that option. People opt for open mortgage rates if they are planning to move in the near future, or if they may come into a lump sum of money, through an inheritance or bonus, that would allow them to pay off their entire mortgage.

What is the difference between a variable vs. fixed mortgage rate?

Fixed mortgage rates are the most popular type, and represent 66% of all mortgages in Canada. With a fixed mortgage you can “set it and forget it” as you are protected against interest rate fluctuations and stays constant over the duration of your term.

Variable mortgage rates are usually lower, but will vary over the fixed interest rates are most popular and represent 66% of all mortgages in Canada. A fixed mortgage offers stability as your mortgage rate and payment will remain the same each month.

What are prepayment options?

Prepayment options outline the flexibility you have to increase your monthly mortgage payments or pay down your mortgage principal as a whole. The monthly prepayment option is a percentage increase allowance on your original monthly mortgage payment. For example, if your monthly mortgage payment is $1,000 and your prepayment allowance is 25%, then you can increase your payments to $1,250. The lump sum prepayment option, on the other hand, applies to the mortgage as a whole, at the original mortgage amount. So, if your lump sum prepayment allowance is, again, 25% on a mortgage of $100,000, then you can pay $25,000 off the principal.

What is the mortgage ratehold?

The rate hold clause refers to how long before your mortgage renewal date you can lock in the prevailing mortgage rate, should that interest rate be a favourable one. The renewal date is the date on which the term of mortgage expires, not to be confused with the amortization period. So, for example, if you have a 5-year term on your mortgage, and a 90-day rate hold, then within 90 days before the expiration of the term, you have the option to lock in the current mortgage rate.