Canadian Reverse Mortgages Explained
August 17, 2010Interest Rates: Why the Sky Isn’t Falling
August 31, 2010I love being an independent mortgage planner because I can offer my customers the best of what the wider mortgage market has to offer at any given point in time. Each morning I receive rate promotions and product updates from lenders across the country and sometimes, there are promotions and deals that jump off the page. “How”, I wondered, “can I keep readers apprised of the best deals going as part my ongoing advice and commentary?” After carefully considering different options, I decided to create a new link in the top right corner of this blog called “The Deal of the Week” which will give you a quick and easy way to see the best of w
hat’s on offer. My first Deal of the Week will probably come as a surprise to my regular readers. Here’s why:
In today’s environment, I have advocated variable-rate financing as the best alternative for the majority of mortgage borrowers. Basically because with economic headwinds building at home and abroad, and inflation well under control, I think that the threat of dramatic rate increases is remote. My favourite plan of attack is for my variable-rate customers to use the money they save on interest to pay off their loan more quickly. One easy way they do this is by setting their regular mortgage payment at the equivalent fixed rate, because the excess portion of each payment goes straight to paying down principal. Having said that, I recognize that some borrowers are more conservative and don’t want to lose sleep worrying about volatility in the interest rate market. If you are part of the group that prefers the predictability of a fixed rate mortgage, then my inaugural Deal of the Week, should be right up your alley.
One of my lenders is now offering a three-year fixed-rate mortgage at 2.9% (which is well below the next best offer). Normally a deal this attractive comes with reduce
d features and flexibility (which are hidden costs) but in this case, the product comes with all of the standard bells and whistles. The only catch is that this is a limited time offer so if you want to take advantage of it, keep in mind that your transaction must close by October 15. Click here for full details.
With today’s prime rate at 2.75% and the average variable rate being offered at 2.10%, a fixed rate of 2.9% that is locked in for three years is a compelling alternative. If you’re wondering if this offer is right for you, contact me and we’ll take a look at your individual situation.
Lastly, I will update the Deal of the Week each Monday, so check back with us regularly to learn about other deals that are jumping off the page.
1 Comment
Dave.. Well put. I can’t agree more. Technically, for a client to qualify for a VRM, he or she must qualify with the BoC Benchmark 5-yr fixed rate – currently at 5.49%. So if the borrower qualifies, he or she would have passed the Benchmark stress test. I’d emphasize the correct way to take advantage of the much lower VRM rate is to fixed the payments at a higher amount (shorter amortization) to pay of the mortgage that much sooner. And take advantage of the prepayment benefits as well.
Cheers.