Mortgage Rates

An Introductory Guide to Mortgage Rates

calendarAugust 14, 2015

peopleThe Mortgage Advisors

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When you are deciding to buy a home, interest rates are one of the many important factors that you to think about. When interest rates are low, there’s no better time to start hunting the Ottawa real estate market for that perfect home. Let’s explore interest rates and how they affect your mortgage.

Mortgage Rates

Unless you have enough funds to cover the entirety of a home purchase, you will need a mortgage to finance whatever portion of the home cost that your down payment does not cover. Interest is an additional amount on top of the mortgage that you pay back to the lender as a cost for the loan.

On a five-year closed mortgage right now, the bank rates are 3.09%. When you work with The Mortgage Brokers, that rate is reduced to 2.69%. Mortgage rates are calculated based on how much money is owed before the loan is repaid in full. Because the money owed reduces over the years, you will pay more interest at the beginning of the loan than you will in the final years. When you lock into a mortgage with a higher rate, it becomes harder to pay off the loan faster. This is because you are putting more money toward paying off interest instead of the principal.

How Mortgage Rates are Determined

Mortgage rates will rise and fall depending on a number of factors, like market conditions, employment, consumer sales, and other national economic indicators. In addition to these external factors, your own personal financial situation will also affect the interest rate that your mortgage broker is able to secure for you. Homebuyers with more stable finances, less debt, and a higher credit score will likely obtain lower rates than a homebuyer with bad credit. Mortgage rates can also vary based on provisions like paying points. Speak with your mortgage broker to determine what mortgage solution is most suitable for you.

How to Pay Less Interest

If you are seeking to pay less interest on your mortgage, the first thing you should do is enlist the help of The Mortgage Advisors. We are determined to find you the best rate and will leverage our network of contacts to find the right solution for you. This includes volume discounts which we pass on to our clients. We can also talk to you about other strategies to reduce interest payments, like shortening the amortization period.

For more information about mortgage rates, contact The Mortgage Advisors today.



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