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Medicine Hat Three Year Fixed Mortgage
The five year fixed rate mortgage is the most popular mortgage product for Medicine Hat owners, but it isn’t the only one. Nor do you have to choose between a one year or five year variable rate mortgage. A compromise between a variable rate mortgage and being locked into a given mortgage rate for five years is a shorter loan term. This is why around twenty percent of mortgage holders have a mortgage loan that locks in their interest rate for two to four years. A good choice for these Medicine Hat mortgage holders would be a three year fixed rate mortgage.
What is a 3-year fixed rate mortgage?
It is a mortgage that renews in three years that has a fixed interest rate for the duration of the loan. Note that this is different from the amortization period, the length of time it takes to pay off the home loan. That could be anywhere from 10 to 25 years. With a three year mortgage, you’d end up renewing the mortgage more often than someone with a five year mortgage. But that’s to your advantage, since you can renegotiate or shop around for a better home loan. You’re less likely to face a penalty if you break the mortgage because you sold your home, though a Medicine Hat mortgage broker can help you find a mortgage lender who won’t penalize you if you sell the property.
When should you consider a three year mortgage?
Are you reluctant to commit to the same mortgage lender for five years? Do you think that your credit will significantly improve over the next 36 months? Do you think interest rates will fall significantly over the next three years? Then a three year fixed rate mortgage is a good choice. It is ideal for those who are committing to live in Medicine Hat for three years but aren’t sure they’ll be here for five or more years. You can renew the three year mortgage for another three years or a shorter loan term, but you’re still building equity instead of giving money to your landlord every month.
Who chooses the 3-year mortgage?
Anyone can apply for a 3-year fixed rate mortgage. However, most such customers are younger than average. This fits our earlier statement that these loans are perfect for those whose credit will be improving. In the case of younger home buyers, they don’t have much credit history, and they may have a high debt load due to car and student loan debt. With a few years of loan payments, they’ll lower their debt to income ratio and improve their risk profile. However, they don’t want to wait five years to get a lower interest rate. And they’re less likely to remain in the same home for five years than their parents approaching retirement. This leads them to favor shorter mortgage periods, though relatively few opt for a one year mortgage.
Call Whalen Mortgages Medicine Hat today to determine what mortgage product is right for you.
Who should take out a 3 year fixed rate mortgage?
Three year mortgages are a good choice if you think you’ll move or upgrade homes in the next two to four years. They are a viable option if you think interest rates will decline over time, but you have more stability than a one year mortgage. If you’re breaking or refinancing your mortgage, one point in favor of a three year mortgage is that it may have lower premiums. Call Your Trusted Medicine Hat Mortgage Brokers at Whalen Mortgages Medicine Hat to lock in your mortgage rate.