medicine hat mortgage broker
Medicine Hat Mortgage Broker

Medicine Hat 5 Year Variable Rate Mortgages

 

The majority of Medicine Hat mortgages have a five year term. This doesn’t mean the mortgage is paid off in five years. Instead, it means the mortgage comes up for renewal in five years. Most Medicine Hat mortgage holders renew their home loan without doing more than reading and signing the contract, though this period is intended to give you the option to refinance the loan or switch lenders. Ironically, fairly few 5-year variable rate mortgage holders refinance at this time except to lock in today’s low interest rates in a fixed rate loan.

For a fixed rate home loan, Medicine Hat home buyers know exactly what they’ll pay every month. They can shop around for a lower interest rate or more favorable loan terms such as having the option to double up on house payments. When you have a variable rate mortgage, the interest rate for the loan will be based on the prime interest rate. That’s the interest rate the Bank of Canada charges when it loans money to lenders. However, that’s not what you pay. Banks will have a stated rate that’s anywhere from a fraction of a percent higher to several percent higher. For example, a bank may say that their interest rate is -0.5% prime. If the stated rate is 2.5%, they’d charge most mortgage customers a 2% interest rate. If the interest rate was 4%, you’d pay 3.5%. You may be charged a higher interest rate, too, if you’re considered a credit risk.

The interest rate that underlies the variable rate mortgage can only change if the Bank of Canada raises or lowers their base rate. This only happens at their meetings every month or two. It can only occur in increments of a quarter percent. This means that your interest rate may slowly rise over time, but it can’t double overnight.

You’ll have time to refinance your Medicine Hat variable rate mortgage into a fixed rate mortgage. And the fees for doing so are lower than what you’d pay if you were refinancing a fixed rate mortgage, especially if you’re staying with the same lender. However, you’d be better off consulting with a Medicine Hat mortgage broker like Whalen Mortgages Medicine Hat. We can find you a competitive mortgage offer from one of our many lenders, and we can often secure a new mortgage for you in a few days.

 Medicine Hat Mortgage Brokers at Whalen Mortgages Medicine Hat to get you the best mortgage rates.