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Why You Should Lock in Your Mortgage Now?

Why You Should Lock in Your Mortgage Now?

There is a fear among Canada’s home loan borrowers, about the potential of the Bank of Canada will be soon hiking their interest rates. For those who can currently afford to make their monthly payments, this may no longer be the case should rates increase.

If you are a homeowner with a variable-rate mortgage, you’ve probably been losing a lot of sleep over the potential. As you are probably already well aware, your rates can vary, and unfortunately, they may just get a bit higher and a bit quicker than you expected too.

Are you currently just getting by with your mortgage payments? If you’re just on the brink of them being affordable, you might want to consider locking in for a five-year term. That’s if you’re able to.

Mortgage Lock

Mortgage Lock

Although this is only speculation at this point, these growing concern among Canadians was caused by some recent comments made by the Bank of Canada themselves. In 2015, the rate was cut twice bringing it down to 0.5 percent, where it has been held at for the past two years. The hope with these cuts and the hold was to help and boost the Canadian economy.

The domino effect, if this were to happen will cause other Canadian banks to also raise their prime rates, pushing variable-rate mortgage rates even higher than they have ever been. Variable rates would be higher than fixed rate if price increases by 50 basis points.

The only alternative for those wished to keep their variable rate is to pay more money down on the principal amount before the hike kicks in. Otherwise, it’s time to lock in.

If you are considering or decide to lock in, speak to your mortgage broker immediately. Your broker can help you during negotiations to find you the best-fixed rates. You may also need to consider switching lenders and your mortgage professional would be the one to best advise you on which lenders you should consider.

In previous years, at the time it may have seemed that the Bank of Canada was going to raise rates, but it ended up holding steady. So, expect the unexpected because they may also put off raising the rates.

Even if it doesn’t happen now, it could in the years to come. Speak to your mortgage broker today to prepare your protection and/or exit plan. At Mortgage Alliance we can advise you on your financial concerns and help you plan for the future.

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