Sep 09 2016
When deciding on a mortgage most only consider the 5 Year Fixed Rate Mortgage product. Although there are several advantages to this product,under most circumstances it is not your best solution.
Penalty fees are incurred when breaking a term early, for any reason. Studies have shown that 70% of mortgages are refinanced after only 3 years, illustrating that in most cases a shorter term mortgage is the most appropriate solution. Further data indicates that variable rates have historically been lower, on average, than fixed rates. Some enjoy the security and stability associated with a 5 year fixed mortgage rate however it is important to consider the long term implications such as limited flexibility and the loss of negotiating power.
Penalty fees and interest rates are viewed as income to the banks and they therefore want to maximize these costs. The penalty fees and higher fixed rate associated with the 5 year fixed mortgage make it the best profit maker for the banks and this is therefore the most prominently promoted mortgage solution.
Don’t get what’s best for the bank. Get what’s best for you.
Give us a call, and allow us to work with you to create the best and most suitable mortgage solution for your individual situation.