If you are looking for a Canadian Second mortgage, it would definitely be worth the time and effort to understand the Canadian Mortgage market and explore the many options you have, before committing to any mortgage.
There are plenty of deals to be found in any competitive service industry and mortgages are no different. Surprisingly, one of the recently conducted surveys revealed that only 43% of people actually shopped around for the best second mortgage, including mortgages packaged by brokers.
Comparing rates of various lenders can help you save tens of thousands of dollars, get flexible terms and also get valuable assistance with hefty down payments. With an adjustable , the interest rate is tied to the Bank of Canada’s interest rates or the bank’s prime rate.
The major benefit of an adjustable second rate mortgage is the low monthly payment during the time that the economy is faring well. However, there is the risk that interest rates could go up substantially if the market is not favorable.
Many lenders entice borrowers by offering lower initial interest rates, which can increase a few fractions of a point each year. Within a few years, these rates can be much higher than traditional, fixed rate loans.
Second mortgage rates in Canada can have a great range depending on the borrower’s qualifications and the lender’s lending criteria. But generally speaking, by monitoring the interest rate on bonds issued by the Bank, anyone can get an indication of interest rate directions.
The bond market is essentially a reflection of investors’ interest rate expectation for the future of the Canadian economy. Investors who do their homework know that bond rates have been declining. The decline in bond rates results in lower interest rates on mortgages in Canada.
The Bank of Canada has backed away from increasing rates due to recent unrest in the market. However, there is speculation the Bank of Canada may slightly raise interest rates in the coming months.