If you’re searching for “Burlington mortgage rates,” it may be because you are concerned about rising interest rates. Interest rates are on all homeowners’ minds right now – especially if they are buying a new home, getting ready to renew/refinance, or have a variable rate mortgage.
Although there are many benefits to a variable-rate mortgage, Canadians tend to be cautious in their mortgage choice. According to the Mortgage Professionals Canada 2020 Consumer Report, there are more than 6 million mortgages on owner-occupied homes in Canada, and of those:
- 77% have fixed-rate mortgages
- 18% have variable-rate mortgages
- 5% have a combination.
So, when you’re looking for Burlington mortgage rates, how will rising interest rates affect variable rate mortgages?
If you Have an Existing Variable Rate Mortgage
First of all, if you have a variable rate mortgage, don’t panic. Historically homeowners with variable-rate mortgages have saved money over the life of their mortgage. While this period of higher interest rates may be a little stressful, the situation is likely to correct itself over time as the hot housing market cools down to a more natural level.
But what about right now? Well, the impact on your mortgage will depend on the type of variable mortgage you have.
Standard Variable Rate Mortgage
If you have a standard variable rate mortgage (Standard VRM), the amount of your payments will not change. This is helpful for managing your budget and your overall financial plan.
However, with a Standard VRM, rising Burlington mortgage rates mean you’ll be paying less on your mortgage principal with each payment. Long term, that may mean you’ll be paying off your mortgage a little longer than you anticipated.
With an Adjustable-Rate Mortgage (ARM), mortgage payments rise and fall based on the prime rate. Homeowners with an ARM enjoyed low payments for a very long time, but now their bi-weekly or monthly payments are on the rise. This could cause a little stress with monthly finances.
On the flip side, the benefit of an ARM is your amortization (or the life of your mortgage) remains unchanged.
Capped Variable Rate Mortgage
Some homebuyers take advantage of a “Capped” Variable Rate Mortgage (Capped VRM). This is an option in between a fixed and variable rate mortgage. With a capped VRM, you enjoy the advantages of a lower VRM, with some protection against Burlington mortgage rate increases.
A Capped VRM allows you to set a threshold for interest rate increases. When rates rise, they cannot exceed your cap.
Homeowners with a Capped VRM can rely on their cap to help protect their budgets and financial plans.
If You are Buying a New Home, or Renewing Your Mortgage
If you are buying a new home or renewing your current mortgage, variable rate mortgages are still a viable option. Remember, historically people with variable rate mortgages have paid less for their mortgage over fixed rate mortgages.
If you’re concerned that rising interest rates may skyrocket, you can consider a Capped VRM to help manage the impact of interest rate rises. There is always choice in your type of mortgage, and there is no one right mortgage for everyone.
Should I Break My Mortgage Due To Rising Interest Rates?
Depending on your circumstances, breaking your mortgage is not recommended. Breaking your fixed rate mortgage to switch to a variable rate can come with harsh financial penalties. However, if you’re close to renewal, some lenders will allow you to renew early and waive the penalty. Also, if you currently have a variable and want to lock in, you can generally do so without cost or penalty if you remain with the same lender.
Worried About Your Mortgage? Ready to Renew or Start Your First Mortgage? Want the Best Burlington Mortgage Rates? Contact HW Advantage Today
At HW Advantage, we focus on our customers. We want to help you get the best mortgage terms for you. While big banks and lenders may say they focus on the customer, they get ahead by charging the highest rates they can get. At HW Advantage, we are paid by the lenders, so it’s in our best interest to get you a low rate, gain a happy customer, and have you send your friends and family our way! Contact HW Advantage to start your journey to find the best Burlington mortgage rates.
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