buy a house, you may spend most of this life a project. In Canada, the lending rate is relatively good, most people will use the loan to purchase, the average citizen of Canada is expected to repay all mortgages, before the age of 59, therefore, choose a most suitable for your loan situation is very important.
bank loans are often suitable for the fixed interest rate and floating rate two, which is more suitable for you? It depends on your ability to withstand risks.
to see the difference between the fixed rate and floating rate mortgages:
(1): fixed rate loans can predict spending
the use of fixed rate mortgage each month (or any frequency choice of payment and payment) mortgage rates will remain unchanged in your mortgage period. This means that you will be able to pay the amount of the principal (the initial amount borrowed) and the interest (the amount of money you borrow) in the duration of your choice. But if in your mortgage period, bank interest rates down, you will not be able to use a lower interest rate.
fixed rate mortgage
] advantages;; ; "can be set up regardless of the
if the bank preferred lending rates rise or fall, will not change
to reduce anxiety and increase budget predictability [
] defects;; stability may pay interest
may miss the potential decline in interest rates
note: according to the different length of time of your choice, the interest rate will have a difference. For example, the 10 year fixed loan interest rate is almost 3 times the fixed rate of interest rate of 2 times.
(two) floating rate loans have volatility
using floating rate mortgages, interest rates will vary with the bank's main lending rate. In this case, your scheduled payment will remain unchanged, but the amount of payment to your principal will vary.
cautious buyers usually choose fixed mortgages, because it means they can budget their mortgage term without any surprises or scare. Variable interest rates are more unpredictable, but if you can take a little risk and uncertainty, there may be more revenue.
] advantages; "
let's see what happens"; if interest rates fall, the cost will be reduced to
can first choose this until the fixed interest rate better to modify the
] disadvantage if interest rates rise to more the money
may increase your financial uncertainty
tip: if you are the type of person to buy the extended warranty, then the variable rate mortgage may not be suitable for you.
what kind of loan is more common in Canada? According to
BMO's "purchase" report, fixed rate mortgages are more popular, there are six or seven adult fixed rate loan options every year, but in 2016 the people choose a floating interest rate than the 5% increase in 2015. Among them, 29% of Toronto homeowners and Vancouver's homeowners choose a floating interest rate mortgage on the.
how do you choose your own way
how do you feel about risk? Fixed rate mortgages mean that the banks that lend them take risks; the floating rate mortgages mean you take risks.
how do you feel about the current market? Fixed interest rate and floating rate differences have narrowed over the past few years, making fixed rate loans more attractive. Interest rates have been historically low, but we all feel that the rise in interest rates is only a matter of time.
tip: the first choice of floating interest rates began to find a more appropriate time to find the lowest point into a fixed interest rate, in order to save money, is a good way, but it is really difficult to do.
what if interest rates go up?
no matter what kind of loan you choose, you must assess the impact of rising interest rates on your mortgage costs. For example, if interest rates rise by 2%, would you still be able to pay the monthly payment? Get ready for emergency, you can start with an emergency fund. According to the
study, not everyone can cope with the increase in interest rates. Many property buyers do not consider interest rates rise, of which 45% of people did not think about the problem of rising interest rates, 27% of people do not realize that this is something they should consider, in fact, you originallyCan consider a more comprehensive.
(text from ehouse411.com)