Before the recession there were numerous different types of mortgages available, now the variable rate mortgage is a popular choice. Banks and other financial institutions got themselves into financial difficulties by freely offering mortgages to people with less than stellar credit ratings. Now they are much more cautious and more heavily regulated. Public opinion, not to mention the public purse and ensuring that the banks only offer mortgages to people with a very good chance of being able to repay them.
It would seem more appropriate to seek a variable rate mortgage since
Mississauga mortgage rates are very low, but many banks will still push for a 5 year fixed term.
Interest rates are very low and destined to stay that way for some time so a
variable rate mortgage means that you will also enjoy these low interest rates. Variable mortgages are easier to find and cheaper to take out. Their eligibility criteria are also much more flexible so if you have a small deposit or wish to borrow a high income multiple then you have a better chance of obtaining a
variable rate mortgage than a
fixed rate mortgage.
So what happens when the interest rates start to climb again? Well the answer is that your mortgage payments will rise by a corresponding rate, so you need to be prepared for this and budget accordingly.
In these frugal years, you need to think very carefully about entering into a long term and costly low such as a mortgage. If you are in employment that is not secure or are not likely to be given an income rise in the future, then you need to decide very carefully about a new mortgage. Interest rates are about as low as possible but they must rise in the future, when this will be, is down to the government and the economists, but go up they must and your mortgage payments will increase with them.
While you are deciding whether to take out a new mortgage carefully review your current and future financial position and what you will do if you are made redundant or become ill. If you feel that you are able to take out a new mortgage or taking on a new mortgage will lessen your current financial outlay then head over to your
Mississauga mortgage broker as soon as you can. Now more than ever is a great time to take advantage of the low interest rates and start your new
variable rate mortgage.