Skip to main content

Saving Big on Your Mortgage

Did you know that when you take out a fixed-rate mortgage, you're paying a big "safety premium"? That's because banks usually set their fixed rates at considerably higher levels than their variable rates. They do so to ensure that a fixed-rate mortgage will still be profitable for them if interest rates rise.
If you're a potential homeowner, you should ask yourself if that premium is worth paying. It may protect you if interest rates spike up suddenly. But if they don't, you may end up paying thousands of dollars in extra interest. That's an expensive insurance policy.
Historically, variable-rate mortgages have proven to be cheaper than those with fixed rates over the long term. Even if you feel that interest rates will rise in the near future, you should take a long-term perspective. With a variable rate mortgage, you are usually starting out at a lower rate to begin with, and you wi%ll benefit from any decreases in interest rates that occur in the future.

Comments

Post a Comment

Popular posts from this blog

Where to invest in real estate now

"Want to buy a house in Vancouver? Hope you have lots of cash. The average price of a house in Lotus Land hit $490,004 in February. Think about it for a second. That's nearly half a million dollars--and 26.5% higher than a year ago. Put another way, it now takes a household income of $142,000 a year to comfortably purchase a place to live. Wasn't the real estate market supposed to slow down this year? Apparently not. And it's not just Vancouver that's experiencing double-digit price increases so far this year. Canadian Real Estate Association (CREA) figures show the average home price from February 2005 to February 2006 rose 26% in Calgary and 15.5% in Edmonton, both economic boomtowns of late. But even relatively moribund Toronto saw an increase of nearly 6%, for an average price of almost $354,000. That's a lot of money to put on the line if you're thinking of investing in the real estate market--let alone looking for a place to live. No wonder people are...
5 comments
Read more

Your Credit Score - What you should know

Your credit score is an important indicator of your creditworthiness. The higher your score the better chance you have at getting credit extended you. While many lenders use bureau scores to help them make lending decisions, they also take other aspects into consideration. Lenders will use your credit score to determine if you are likely to pay your bills and also help them place you with the appropriate repayment plan. For example if you have claimed bankruptcy in the past they might place you at a significantly higher interest rate. The following is used to calculate your beacon score: Payment history- This indicates if you have made your payments on time Amount owed - Comparison of what you owe to your credit limits with various lenders Length of time - This indicates how long you have had credit accounts New Credit - Shows how often you are looking for new credit Type of credit - Considers the type of loans you have - car loans, lines of credit, credit card balances I can't str...
4 comments
Read more