11
May
Top Reasons Why A Fixed-Rate Mortgage Could Be A Good Choice

Do I choose a variable rate or the security of a fixed-rate mortgage? This is a question that most Canadian homebuyers ask themselves before they can sign up on a mortgage deal. Both these options have their advantages and disadvantages and it is important to go through all of them before making a choice. If you are contemplating of acquiring a 5 year fixed mortgage rates in BC, we have outlined reasons why a fixed-mortgage rate could be your best choice. First, let us look at the difference between variable rates and fixed-mortgage rates.

Variable rates

Most people automatically assume that getting a variable rate has an advantage over getting the fixed rate in that they can enjoy low interest rates when they go down. The mortgage market is fast becoming volatile and there are many factors that affect the interest rates. Some of these factors include inflation, political uncertainty and economic growth just to mention a few. 

This means that mortgage rates can change at any one time and they can either go down or go up. This is a disadvantage to borrowers who have variable rates on their mortgages since they can’t correctly predict whether rates will rise or change with time. If you are a fixed income borrower, this poses a great disadvantage in that you cannot budget on variable rates which can affect your finances. If you are on variable rates, you can easily change to fixed rates at any time. 

Note that if you decide to change lenders when making the switch from variable rates to fixed rates, a penalty is usually charged. It is best to stick with your current lender and negotiate on low interest rates.

Fixed-mortgage rates

Most people prefer the fixed-rate mortgages over variable rates since they offer security in knowing that they won’t be affected by upswings that may take place in the future. Most lenders are willing to offer exceptional bargains for fixed rates. Statistics show that the 5 year fixed mortgage rates offer is popular with borrowers due to the low interest rates offered. There are a number of mortgage brokers who help borrowers secure low interest mortgage rates from lenders.

How to apply for fixed-mortgage rate

You need to take time and research on lenders who offer the best fixed rates in the market. You can check several companies in your area and compare the rates to pick the best. Check online for mortgage lenders and read reviews about their services to ensure that you deal with a reputable lender. Once you identify a lender, make sure that you go over the mortgage agreement to ensure that you understand all the terms associated with it. Ask the lender to explain terms that you don’t quite understand and check for any hidden charges that may be included. If you choose to, you can ask your lawyer to go over the agreement and clarify if what the lending company says is correct. 

Improve your credit score to get the best fixed-mortgage rates

If you have a good credit score, it is very easy to negotiate for low interest rates. Lenders ensure that they go through your credit history to ensure whether you qualify for a mortgage or not. Just because you have a bad credit score does not mean that you can’t qualify for a mortgage loan. If you have a bad credit, you can approach a lender and work out on a favorable fixed rate that you will be comfortable with. However, you have a chance to lock in lowest fixed rates if you are willing to improve your credit score before signing your mortgage agreement. Ensure that you pay off any outstanding debts you have to increase your credit score.

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