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Mortgages – time to lock in?

Chances are, the single biggest debt you might hold will be the mortgage for your home.

Today’s first time homeowners tend to focus upon record-low interest rates for traditional mortgages. Right now, assuming that you qualify with a reputable lender, it’s possible to lock in an interest rate under four per cent for 10 years. How can you go wrong?

That in itself is a loaded question – perhaps even rhetorical to some. Prudent homebuyers will have done some research and discovered that mortgage rates go in cycles. Right now, rates have never been lower. But ineveitably, that will not last.

What to do?

Five year money is still hovering around the 2.5% to the low 3% range – well below historical averages. Many financial experts will advise you that unless you are an individual that likes to gamble, lock in for the longest term and at the lowest possible rate you are able to negotiate.

Further, you may choose between a fixed rate vs. variable rate. With a fixed rate, there will be no surprises during the term of the mortgage. Variable? That depends upon your financial institution’s prime rate and the Bank of Canada’s overnight rate.

Then there is the length of term. This is, simply, the length of time you commit to the lender – and the agreed upon rate. Terms range from six months to 25 years. Most Canadians go for five years.

Flexibility is also important. Will your mortgage allow for pre-payments. Some allow for a 20 percent annual pay down.

The choices are varied and really not that complex – if you do your homework.

Mary Bateman is your trusted single resource for all kinds of housing options in Barrie and Simcoe County. A professional real estate agent with considerable expertise and knowledge of the residential market, she is ready to work for and with you. Call Mary Bateman today at RE/MAX Chay Realty Inc. at (705) 722-7100 or toll free (866) 606-2429. Get to know Mary at www.marybateman.com or on Facebook. A convenient call or a click away.