Are you ready to invest in property, and keen to start making financial plans? Great! You have come to the right place!
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Before you get started, let’s make sure you know your options. First, you are going to want to look into getting a mortgage loan. Make sure you understand the commitments and implications of mortgages before you finalize any agreements.You should consider the mortgage rate of interest, and whether you want a fixed or variable rate. The good news is, currently in British Columbia, you can sign up for a great mortgage deal with the best rates in the region, and save potentially thousands of dollars. Finally, consider what kind of mortgage suits your needs; do you need an open or closed mortgage? Or a second mortgage, for instance. Read on to address these questions.
Mortgage Loans
Firstly, let’s be clear on what a mortgage is and what it involves. A mortgage is a loan that you, the buyer, borrow from a lender so that you can pay for a property. Then, over an agreed-upon length of time, you make monthly payments, with interest, to pay the lender back and eventually pay off the loan. Once you have paid the loan off, you outright own the property. However, part of the agreement of a mortgage loan will stipulate that if you are unable to make the payments the lender can take the property. So you need to be clear on what you are signing up for, what your monthly payments will look like, and how to make smart decisions when choosing your mortgage contract.
Get The Best Mortgage Rate
One of the key factors when choosing your mortgage agreement is the rate of interest charged on the mortgage. This is determined by the lender and the mortgage rate can either be fixed, meaning it stays the same for the duration of the mortgage, or variable, meaning it will fluctuate depending on a benchmark rate that can increase as inflation and the employment market grow. Your mortgage rate will also depend on your credit profile.
If you are in British Columbia and you are looking for the best rates around, check out Altura. Their BC mortgage rates beat out their competitors and could save you thousands of dollars. Even if you have been pre-approved or fully approved by another bank or broker, you are not yet committed to their mortgage plan, and it is not too late to ask for a free consultation, with no obligations.
Fixed or Variable Rates?
A fixed-rate mortgage agreement sets the rate of interest from the onset, and this never changes, even if you are paying your mortgage off for thirty years, and the market has completely changed.
A variable mortgage rate, by contrast, will fluctuate with the market. This provides less certainty and consistency to borrowers. However, on the plus side, variable mortgage rates tend to be lower. So, you should consider whether you would like to pay a potentially higher rate for the benefits of consistency and security that your rate won’t increase, or whether you prefer to pay a fluctuating rate at a generally lower cost. Most borrowers tend to go for a variable rate, and in 2022 this is generally the recommended option.
Due to the Covid-19 pandemic, the Canadian economy has been slowed down, and it is likely to take several years to recover. During this time, mortgage rates are not expected to increase as the Government of Canada will want to encourage people to keep borrowing. Keeping interest rates relatively low for a long period of time should help to re-stimulate the economy. This is just a prediction, but it is expected to be beneficial for borrowers to choose variable mortgage rates in the current market.
What Type Of Mortgage Suits Your Needs?
You will find several different types of mortgages available to you. These include mortgages for new Canadians, self-employed, bad credit mortgages, second or private mortgages. As well as these options, you need to consider whether you want an open or closed mortgage.
An open mortgage has flexible options to increase mortgage repayments and allows you to pay off a lump sum. Meanwhile, a closed mortgage will penalize you for paying off all or part of your mortgage early. Closed mortgages tend to come with lower interest rates, but offer less flexibility.
Now that you know what a mortgage loan is, what to look for in interest rates, and what kind of mortgage you are looking for, you can make an informed choice on how to finance your real estate investment. Good luck and happy shopping!
