Did you know? The majority of Canadian mortgage consumers typically opt for Fixed-Rate Mortgages? More specifically, those with 5-year terms. This is largely in part because these are the most successful/profitable products for Lenders.
Although 5-year Fixed rate Mortgages are Popular and the Interest Rates are very attractive, it doesn’t necessarily mean that this is the best product for a particular individual. In fact 66% of all 5 year Fixed Mortgages are broken 2.7 years into the 5 year term.
Before deciding on a Mortgage Term Length and Product, always ask your self a few questions:
- Where do I see myself in 1 year, 2 years, 5 years etc.?
- Will I have more kids?
- Will I be retired?
- Will I have to move to a new city for my career?
- Will I still bein my current relationship?
These questions are important because it will really qualify what Mortgage Product you need. In other words, if your planning on moving to another city or buying a bigger house in 2 years, then you will not want to commit to a 5 year Fixed Mortgage. When Fixed Mortgages are broken, very often Pre-Payment Fees will apply which can be catastrophic to your Financial well being. These Penalties or fees can be in the Tens of Thousands of dollars. I personally have seen them upwards to $47,000.
So, perhaps a shorter term Mortgage might be better for your life or even a Variable rate Mortgage.
Always seek a Mortgage professional’s advice and be sure to be as Transparent as possible. It could mean a world of difference when your Life unexpectedly changes.
As always, reach out anytime!!
Tom Parent “ing” you to Better Financial Solutions
phone: (519) 301-5149
email: tom.parent@domionlending.ca
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