Mortgage Guide: A Look At Variable Rate Mortgages

So far along this mortgage guide tour we have looked at fixed rate mortgages as well as amortization length. With the recent normalization and change in trends of the Windsor real estate market are being driven in part by the Bank of Canada raising their key rates. These increases and change in trends is what has some buyers who had no luck in the past restarting their searches for houses for sale in Windsor. When you get pre-approved for your mortgage and you start viewing Windsor for sale the other option for the type of mortgage rate available is variable and we’ll discuss what that means here.

With a variable rate mortgage your payment is static and does not fluctuate with the prime or key rate. The strategy with a variable rate is to set a higher payment in order to pay down principal faster to minimize the amortization period. The lower the remaining amortization the less susceptible you are to future rate increases. The Bank of Canada has 8 preset dates each year, the prime rate does not change randomly. Look for the signals of the economy such as the GDP, unemployment, inflation to gauge where it is going. In the event it looks like rates will rise, there is typically an opportunity to lock in the rate. If rates rise the amortization period lengthens and if they drop it decreases.

As always, what was discussed above is meant to help provide you a base of knowledge. Be sure to sit down with a mortgage adviser who will help you determine the best plan of action based on you and your situation. As always, if you need a recommendation for a mortgage adviser, let us know and we can get you in touch with some of the best in the area.

Here at Jump Realty our agents will give you honest advice on what course of action is best for you in their professional opinion and will always put taking care of your best interests first! With offices in Windsor, Tecumseh, Kingsville, LaSalle, and Chatham, no matter where you are, a Jump agent is ready to help. Please contact us for any housing needs and let us give you a better real estate experience!