Benefits of Short Term vs Long term mortgages

Westboro Home for sale 499 Highcroft – $569,900.
5 bed 4 bath and with a direct entry garage
walk to the Westboro village shops and services

Current as of Tuesday Dec 22, 2010

                   Bank Rate           Rates I like

Closed                 3%                    2.25%

1 Year Closed    4.30%               2.35%
2 Year Closed    3.85%               3.00%
3 Year Closed    4.15%               3.19%
4 Year Closed    4.94%               3.49%
5 Year Closed    5.19%               3.74%
7 Year Closed    6.30%               4.45%
10 Year Closed  6.75%               4.99%

Mortgage Rates in Ottawa :
Buying a house envolves a long period of borrowing to pay it off. Here are some thoughts on how to borrow and not get burned.
A number of people choose a long term mortgage of 3 to 5 years because they want something stable that matches their salary pay date and ability to afford. They reflect, now that they have a house they want peace. This strategy may be fine for the first few years but think what might happen if you had a change of plans. Let’s say you need to sell the house; job transfer, marriage break up, ouch! need a bigger home for the growing family, yes, the mortgage rates rise of you loose an income source or you receive an inheritance, what then?

Banks will try to adapt to your new direction. They will carry the mortgage to a new home. That’s called porting a mortgage from the existing home to the new one. If there is a pay out before the anniversary they will charge a penalty of unpaid interest due to them. This amount could be as much as 6 months of interest and fees. Can you imagine having to pay $5,000 interest to settle up the mortgage agreement? This scenario would occur when you want to sell your house and you’re not buying another one. The bank could also carry the mortgage to a new purchase where you need more money. Then they will blend the different interest rates into one new rate on the balance. Ask how they have arranged the blending and ask if there are additional fees tacked into the blended rate! Don’t be surprised!

I like to be on a personal rapport level with my bank representative. So meeting with them more frequently a week before the mortgage renewal date is a good thing. I like to review my net worth profile and ask if there is any words of wisdom they might have that I can pass on to my valued clients. A short term mortgage may be a good thing.

Call now for an opinion on your situation. It pays to ask questions and then make up your own mind.