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Learn about Mortgage Rates when Refinancing Mortgages in Mississauga

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Refinancing Mortgages in Mississauga - Mortgage Rates

 

The Definition of Mortgage Rate

 
Take a moment to brush up on what you know about mortgages and getting better rates. According to businessdictionary.com, a mortgage rate is an "Interest rate that is used either as a reference point in which a lender will not pay a rebate or require discount points, or for which a lender will pay another lender par value for an existing mortgage. When valuing mortgage servicing rights, par rates are also used and are necessary in determining how valuable the mortgage servicing rights are." Usually, the borrower's credit score lends a role in the rate charged on a mortgage and determines the size of the mortgage loan. Essentially, the rate one establishes the overall cost of the mortgage. A higher rate means a higher total cost, and lower rate means a lower cost. Therefore, it is in the borrower's best interest to get the lowest rate possible, or so most would think.
 

More on Mortgage Rates

 
While it seems logical that a lower mortgage means more savings, it may not actually be the right choice for you upon further inspection. That's almost like saying the best car out there is one with the lowest possible monthly payment. Lower rate plans often come with harsh restrictions, such as mortgage penalties or refinancing limitations. Such restrictions can end up costing you more than what you "gain" with a lower mortgage, and may be avoided with a higher mortgage rate plan. Planning your mortgage can be tough; you never truly know what your needs will be five to ten years down the road. Statistically, more than half of Canadians renegotiate their mortgages before their term ends.
 
Furthermore, the average borrower on a five-year plan renegotiates their mortgage every three to four years. With this in mind, borrowers should opt for a low- to mid-rate mortgage that gives them the flexibility they need.
 

Important Questions to Ask

 
Staying informed is key when choosing your mortgage rate. Make sure you do your research and ask yourself and your mortgage broker lots of questions. Ask yourself if you looked into all your options or if you left out any banks or credit unions. Websites can help you shop around for mortgage rates and compare options from different banks and credit unions with a mortgage calculator. This is a crucial step since brokers are not likely to help you shop around for a better rate than they or their company can offer. Another important question is, how long will the lender hold your mortgage rate once you have applied? The general rule is that the better the rate, the shorter the hold-rate period (usually 30–45 days), also called "quick close rates.” Knowing all this will keep you well informed, but it is best to seek guidance from a licensed and awarded mortgage broker when taking out a second mortgage or refinancing mortgages in Mississauga.

 

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