Kelleway Mortgage Architects
Glen Kelleway answers common questions about evaluating your mortgage options.
Should I wait for my mortgage to mature before calling you?
No. You should contact us up to 120 days before your mortgage matures so I can secure you the best rate available at that time. Doing this will protect you from any increases before your renewal date. You will also benefit from decreases should they occur. Most lenders send out their mortgage renewal notices only a month prior to renewal, offering existing clients their posted interest rates. The rate you are offered is usually not the best. We will investigate all of your options and find the solution that best suits your needs.
Should I go with a Fixed Rate or Variable Rate?
That's a difficult question......what fits one client's needs may not fit another's. Even the same clients may choose different rate types at different times depending upon changes to their life circumstances, changes in the market, or changes to the type of property they want to mortgage. Here are some definitions to start our conversation.
Fixed Rate Mortgage
The mortgage rate stays the same for the whole term and the mortgage payments are consistent during the term of the mortgage.
Variable Rate Mortgage
The mortgage rate varies with fluctuations in the bank prime rate. As a result, mortgage payments may vary during the term of the mortgage. A minimum term commitment is often required (usually 3 years). You may have the option to "lock-in" the mortgage at a fixed rate during the term.
What's the difference between a Closed Term and an Open Term?
Closed Term Mortgage
The mortgage contract is typically written for terms of 1 to 10 years. Penalties may be triggered if the borrower wishes to end the contract before the term expires (early repayment).
Open Term Mortgage
The mortgage contract is written for a short term (usually 6 months or 1 year). No penalties are triggered if the borrower wishes to end the contract before the term expires.
Should I take a short term or a long term mortgage?
The options for mortgages available can be very confusing for most mortgage shoppers. Terms for mortgages vary between variable and fixed rate, 6 month terms to 10 year terms. Savings can be had by taking a variable or floating rate mortgage. Typically the shorter the term or guarantee of the rate, the lower the rate will be. The up side of variable rate is the strong potential for interest rate savings. The down side is the fact that you are accepting the interest rate risk without a guarantee. If you are considering a variable rate mortgage you need to look at your own risk tolerance, and your cash flow available to deal with potential increased payment. Considering projections of rates and where we see interest rates heading can also be important in this decision.
Can my mortgage interest be tax deductible?
If you are running a sole proprietorship, have an interest income bearing portfolio, or own rental property, you may be able to make your mortgage interest tax deductible. Speak with me as to how to set this up appropriately.