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Rate Fixation


Rate Fixation

When it comes to mortgages, consumers tend to fixate on the rates more so than anything else the mortgage may be able to offer. Banks are well aware of the consumer mentality, hence banks often advertise attractive rates for fixed mortgages and like clockwork, consumers often want these rates or better. Let’s discuss both topics in a little more depth.

Firstly, it’s important to understand why consumers focus on mortgage rates. Simply put, it’s because the lower the interest rate, the more money you save by not paying that interest over the term of the mortgage.  The low interest rate strategy often seems like a “no brainer”, but there are other factors to consider that are just as important. For example, the term of the mortgage, open or closed, etc. are some things to consider before deciding on your mortgage solution. The term of the mortgage and whether you decide to go with an open or closed mortgage will affect your ability to make future decisions on your mortgage such as in the case of refinancing. Sometimes it may be the case that although you find a desirable rate, the mortgage is closed on a 5 year term which limits your ability to make financial decisions during this time when it comes to your mortgage.

On the topic of attractive rates often offered by the banks, many consumers fall victim to believing that these rates are for everybody when in fact they are not. These desirable rates are viewed by the masses but are not applicable for everyone. Mortgage applicants must be approved for these rates based on their credit worthiness, reasonably low debt ratios, and other factors that are outlined by the banks in their policies. So although in an ideal world, we would all like to receive these low rates from the banks, the truth of the matter is, we all won’t.  The application approval process is tailored by the individual’s circumstance which also determines the mortgage rate.

Regardless of your situation, we will always get you the best rate that you qualify for based on your individual circumstances. To find out more check out our website below or give us a call:

www.cmsmortgages.ca

(905) 455-5005

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