A peek behind deeply discounted 5-year rates.

When considering a deeply discounted 5-year rate, keep in mind that cheapest isn't always best. Strangely, we know that's true when we're shopping for anything else - but we still tend to believe that lowest rate is the one and only factor in choosing a mortgage. But, that low-rate mortgage could actually cost you more in the long run.

An amazing cut-rate mortgage could have you locked in to a very rigid contract filled with financial "trip lines" that could work against you down the road. That's why it's important to check the fine print. For instance, is the mortgage fully closed? That means you're not leaving the lender unless you sell your house, so your options are limited and you have no negotiating power if your needs change in the next 5 years. Low or no prepayments: means you have no or limited ability to chip away at your principal to reduce your overall cost. Maximum 25-year amortization can take away flexibility you may need later. Many prudent homeowners take a 30-year amortization but set their payments higher using a 25-year or lower amortization. This gives them the option to reduce their payments should an emergency arise or a special need like maternity leave. For first-time buyers too, a 25-year amortization means higher payments than a 30-year amortization and could limit their entry into the market.

Spot a deeply discounted 5-year rate? Talk to me first. I'll always help you find the right combination of low rate with the options you need to achieve your goals for homeownership and the financial future you want.

No Bank of Canada Rate Change For The 11th Consecutive Meeting

With weaker outlooks for Europe and the U.S., the Bank of Canada announced earlier today that it is keeping its key policy rate steady, exactly where it's been since September 2010, which makes this the longest recorded rate pause.

In its statement the Bank noted that "the recession in Europe is now expected to be deeper and longer than the Bank had anticipated", and that the "U.S. recovery will proceed at a more modest pace going forward."  The Bank noted that while the Canadian economy "had more momentum than anticipated in the second half of 2011, the pace of growth going forward is expected to be more modest than previously envisaged, largely due to the external environment."

The prime rate at most lenders will stay at 3.00%, which means those with variable-rate mortgages will not see their payments change and will continue to enjoy historically low rates.  New variable rate mortgages are available to qualified borrowers at Prime minus 0.10%.  

The Bank's next rate decision is scheduled for March 8.

And while not related to the prime rate, it is worth noting that fixed mortgage rates are near all-time lows, with 4 and 5 year mortgages available at rates that are close to variable-rate pricing. 

If you would like to review your options, please let me know.

Mortgage Planning

Consider a mortgage check up in the new year.

As we begin 2012, consider getting a mortgage check up in the new year to make sure you have the best mortgage strategy for meeting your financial goals.

A personalized mortgage check up from an Invis mortgage professional is a simple way to ensure:

• that your repayment approach suits you, for example with payments structured to maximize mortgage principal reduction,
• any consumer debt you may have (such as credit card balances) is transferred to a lower interest rate,
• you have access to the lowest-cost funds for renovations, education and other major expenditures.

Contact me to learn more about your current mortgage options and how to make your home equity work for you.