In recent weeks there has been a lot in the news about increases to mortgage rates, locking in rates and lots of media hype about what will happen to interest rates. Although difficult for some buyers to hear, I think it is positive news to see us moving away from emergency interest levels back to what are still considered historically low rates. It is a sign the economy is stabilizing and that is good news to us all.
For those looking to save on their mortgage, wondering if they should lock variable rates into fixed rates, I have some info passed on from Daryl Marsden from Canada Mortgage Direct.
"I believe that interest rates will continue to rise but that the prime will increase slowly over the next couple years. This will provide you with lots of opportunities to continue to save interest and pay down your principle on your mortgages.
If you have not moved to bi-weekly accelerated payments then now is the time to do so as you want to pay off as much principle as possible while rates are low. The future says we will all be paying higher interest rates and that means less will go towards the principle balances we all have so any extra you can apply in the next couple years will go a long way to saving you money in the long term.
The best advise has remained the same, pay off as much of the mortgage as you can with any extra savings you have. If you are looking at locking in the rate then your payment will jump up to the current 5 year fixed rate so why not budget for that payment right now and apply the difference from your current payment and the new payment to the mortgage balance.
By doing this now you will prepare yourself mentally for the budget change and you will be now making those extra payments on the principle therefore saving thousands in interest with every quarter that goes by. If you stick to this type of budget you can be a lot further ahead when the time comes to lock in rates."
If you looking to buy a home, contact a REALTOR® and contact a Mortgage Broker such as Daryl to explain your numbers to you and work with you to achieve your goals.