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Finance

Ten year mortgages making comeback

The 10-year fixed-rate mortgage has generated renewed interest lately as borrowers look to lock in for the long term and enjoy the security and peace of mind this brings.

Following are three key reasons to consider a 10-year mortgage term:

1. YOU DO HAVE OPTIONS AND NO NEED TO BE CONCERNED ABOUT THE LONG TERM:

After five years, you only have to pay three months’ interest to get out of the mortgage. This is currently the lowest penalty available for a fixed rate – much more attractive than facing a much higher interest rate differential (IRD) penalty!

2. THE SECURITY KNOWING YOUR PAYMENTS ARE STABLE.

Depending on your situation knowing your payments will remain the same provides peace of mind. If you are on a fixed income, taking advantage of the long termed fixed-rate mortgage can definitely be beneficial as it is quite likely that the rates will be increasing over the next ten years. If you are also just starting out with a tight budget knowing that your payments will remain the same makes budgeting easier. And, chances are, after 10 years are up, you’ll be in better
shape financially and have more equity in your home.

3. NOT HAVING TO WORRY ABOUT NOT BEING ABLE TO AFFORD ANOTHER HOME:

You don’t need the equity out of your home for your next purchase as you can buy again with a 5% down payment. For instance, if you purchase with 5% down, your property would have to go up more than 25% for you to get equity to use as a down payment for a second home, which is not likely in five years. But, you can turn your current condo into a rental and buy your next home with 5% down (with a combination of savings or a gift).

Rental mortgages usually require a 20% down payment, whereas primary residences typically require just 5% down. Purchasing a condo to live in until you’re ready to buy another home, and then renting out the condo, is a great way to become a real estate investor without having to come up with a 20% down payment.

The return of the 10-year term means you have options. It may not be the best option for everyone, and the market may change in a few months to make it less attractive. I would be pleased to show you all the products that are in the marketplace today and how they meet your specific situation to ensure you receive the best product and rate to
meet your unique situation. I will determine what your comfort level is with payments and if you need security in a longer term mortgage.

Call us today at (250) 862 1806 or visit our website: www.okanaganmortgages.com



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About the author...

Laurie Baird is a Mortgage Broker with Verico Complete Mortgage Services. She has been in the mortgage business for 17 years starting as a lender with Royal Trust. She later worked at the Royal Bank as a Mortgage Consultant and 11 years ago became a Mortgage Broker. As a Mortgage Broker she is able to match her clients' needs with a lender who will provide them with competitive rates and products. Laurie has a Bachelor of Education degree from UBC.

Contact her at 250-862-1806 or by fax 712-0209 or visit:
http://www.okanaganmortgages.com/

Visit Laurie's blog at: http://www.okanaganmortgages.com/blog.html




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The views expressed are strictly those of the author and not necessarily those of Castanet. Castanet presents its columns "as is" and does not warrant the contents.


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