Mortgage Products Available to You

Fixed mortgage interest rates

If you chose a closed fixed interest rate, you are locked-in with the lender for a specific term. The interest rate charged will not change during the term of the mortgage. Should you decide you want to break the mortgage (say, you decide to sell your home), lenders will charge a penalty. The penalty is generally the higher of three month's interest or the interest rate differential
The interest rate differential (IRD) is the difference between the existing rate and the rate for the term remaining, multiplied by the principal outstanding and the balance of the term.

Example.

• $100,000 mortgage at 6.5% with 24 months remaining.
• Current 2 year rate is 5%.
• Differential is 1.5% per annum.
• IRD is $100,000 * 2 years * 1.5% p.a. = $3,000


Variable interest rate mortgage

Variable rate mortgages are a popular option these days. What is the best variable rate product in the market? It has become difficult to compare since most lenders offer a variety of options - teaser rates, monthly compounding, pre-payment, cashbacks, convertible, etc. I would be happy to discuss the various options with you, based on your needs I could provide you with a recommendationd as to which product would meet your needs.


Capped variable interest rate mortgages

This is a variable rate mortgage with an interest rate ceiling. With this product, the discount on the prime is not as large as a straight variable rate product.

Capped variable mortgages makes sense when interest rates are on the rise. When deciding on this product, it is important to find out from the lender the cap rate and the term of the mortgage. You then evaluated whether you see interest rates reaching the cap.


Split Term mortgage

A mortgage which allows you to minimize -- or hedge -- your interest rate risk by splitting your mortgage into parts. For example you could split your mortgage into a fixed mortgage and a variable mortgage.
Split term mortgages are generally available for conventional mortgages (i.e., you have at least 25% equity in your home)


Mortgage Interest rate trends

As a mortgage professional, it is important for me to keep my clients apprised about the latest mortgage interest rate trends. Having an understanding as to where rates are moving will save you money by allowing you to develop the right mortgage strategy.

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