Home » Mortgage Payments

Mortgage Payments

Fixed vs Variable, Locked vs Flexible – Which Is Better For You?


The difference between the two types of mortgage rates has dwindled in recent years, largely due to the historically low interest levels. Fixed rates offer a conservative approach to mortgages, with each payment being the same as the last until your term is renewed. Variable rates are historically better, but have a certain amount of risk associated with them. If interest rates were to rise dramatically in a short span of time your payments would rise accordingly.

It’s an age old struggle of risk vs reward. Your income bracket and savings will likely factor into the equation as well.

When looking at a variable rate mortgage, try and decide whether or not you are comfortable with the risk. Assess your current income level as well as your future potential income. In the worst case scenario, could you weather a rapid rise in interest rates?

A good rule of thumb is to look at what your payments would be if the interest rates were two percent higher than they are currently. If you don’t think you can handle the increase, it might be a good idea to avoid this type of financing. If you are the type of person who can’t deal with any level of uncertainty, then perhaps it’s best to look at the alternative.

Most mortgage professionals are big proponents of variable rate mortgages, because statistically they outperform fixed rates. If you can, try and pay extra every week or month – whatever your frequency may be. Paying the minimum is never a good way to go about decreasing debt, and variable rate mortgages are no exception to this rule.

Fixed rates are a much more popular choice among consumers, as most people are naturally averse to risk. Five years terms are considered the standard in the Canadian mortgage market as they have been historically popular among real estate buyers. These days there isn’t a lot of difference between the two different types of rates, which is making fixed even more popular among consumers.

The other factor to look at with your mortgage purchase is how much flexibility you want with the term and the ability to put extra money down when it becomes available to you. Prepayment privileges are often available, and can vary from the ability to put a lump sum of 15 to 20 percent of the overall principle of the mortgage.

Another smart way to pay down your mortgage a little quicker is to round up your payments if possible. If your payment comes in at $1875 per month, why not round it up to $1900 if possible? Your budget won’t really notice the difference, but you will notice it when your mortgage is finished 6 months earlier in the long run.

When it comes to exploring your options, it’s always best to call and speak with a professional. Always feel free to call me anytime to discuss your financing, I can be reached on (778) 320-4346.

Read More »

Mortgage Professionals Help Find Flexible Payment Options

Mortgage Professionals Help Find Flexible Payment Options

In this day and age, a mortgage broker can seem anachronistic. Information is ubiquitous and so is advice. Deals are commonplace and take on many forms. So why the need for a paved-road expert who knows the ins and outs of the standard process?

First – because proven methods will always be worth more to some homeowners. And secondly, because today’s mortgage broker is much more than simply a guide. Flexibility is your currency during a financial exchange of this sort. Gain as much as you can with a professional at your side.

It’s a cynical market out there – in some ways. Assumptions are made at every turn and advice can lead in multiple directions at once. Movements towards more close-to-the-hip, autonomous deals are common. Some people instruct homeowners to do their own digging. And you should. But the fact remains that when operating in a longstanding field – once that happens to be uniquely primed for solid rates at the moment; nobody will steer you through the normal hurdles of the process more effectively than a mortgage broker. Vancouver has many, all armed with the market knowledge, core practice sense, terminology shortcuts, and direct lines to lenders that your average homeowner couldn’t possibly have.

Does this mean that you abandon alternate searches? Hardly. A keen mortgage broker will have an arsenal of tactics, and if you match well with them and express your needs correctly, you encourage them to open up more innovative routes.

Be direct. Find a broker known for creativity if that’s what you want. Or find a broker who prides themselves on a proven, traditional approach. Regardless, reputation means a lot. When it comes to past work: a broker is no more and no less than what they’ve managed for clients.

Be clear, but keep some information private. Let your broker know Plan A. Let them even know Plan B. But have other options, resources, and links to fall back on. It will both show your awareness – and thus open your broker up to more aggressive leads if you so desire – and give them room to push hard on options that, at the end of the day, you can take or leave.

What works, works. If you find a rate that seems more conservative than you’d like – or more lenient – yet seems to be a comfortable fit for many homeowners: ask yourself why. Look back and ask around: what worked before and what works now? Find out: what are the greatest obstacles encountered during the process? Decide how safe you’re willing to go.

Follow your news, know your city. All brokers are licensed by their provincial BC government. This means that all new protocol and regulations are documented. Follow lending laws, homeowner laws, and categorization of brokers. Make informed decisions.

Sound simple? It rarely is, but with some clear guidelines, finding a Vancouver mortgage that suits you can be an informed, measured decision.

Read More »