Calgary Mortgage Rates
Buying a home in Calgary can be exciting. Unfortunately, it doesn’t always come without stress. You need to consider things like home insurance, a down payment, and, most importantly, a mortgage. Most people cannot afford to buy a home outright, so they have to borrow money from a bank or other lender to pay for it.
You don’t want to be stuck paying off your mortgage forever because the rates are too high or the conditions are too rigid. So, INCOME.ca is here to help! We’re going to discuss the benefit of comparing rates and the difference between closed versus open and variable versus fixed mortgages. Let’s dive in, Calgary!
Frequently Asked Questions
Why Should I Compare Mortgage Rates?
You may be wondering what the benefit of comparing mortgage rates in Calgary is when most mortgage brokers offer similar rates. The rates may be similar, but they are not the same. Things like the down payment required, fees, and penalties will all differ depending on the Calgary lender you work with.
To find the best rates possible, you will need to make comparisons. This can be a tedious process as there are many lenders in Calgary, but it will be worth it in the end. Comparing rates will help you get your dream home in Calgary (see also best mortgage rates in Ottawa) at a price you can afford.
Should I get an Open or Closed Mortgage?
Closed Mortgages
A closed mortgage cannot be paid off, re-negotiated or refinanced before the term ends unless you pay a hefty penalty. It typically comes with a fixed monthly rate, making it ideal for those who want to budget their expenses.
Closed mortgages are available in a variety of lengths. People tend to choose a 5-year fixed mortgage, but your closed mortgage term can be shorter or longer.
A closed mortgage tends to be the more popular type as most people do not anticipate the need to pay it off early. If you see yourself wanting to change terms or rates, an open mortgage may be the best mortgage type for you. Also, check out which mortgage is best for the self-employed.
Open Mortgages
On the other hand, an open mortgage can be paid off, re-negotiated, or refinanced at any time during your term without any penalties. With this pre-payment flexibility comes a higher interest rate.
If you ever get a big bonus at work or maybe an inheritance, you may want to put this towards paying off the loan. With a closed one, you would have to pay a hefty penalty fee to do so. With an open one, you are free to pay them off whenever you want.
What Is The Difference Between a Variable vs. Fixed Mortgage Rate?
A fixed-rate mortgage is a type of mortgage where the interest rate stays the same for the entire term. A 5-year fixed rate tends to be the most popular type, but terms can be longer than that. So, even if market mortgage rates change, your rate will not. When your term is up, you will need to renew it. At this point, your rate will likely change to match the current mortgage rates.
A variable-rate mortgage, however, is a type of mortgage where the rate will change during your term. As Calgary mortgage rates change, yours will as well. This can be beneficial if the rates in Calgary are low during your term. If the rates in Calgary go up, though, you may end up paying more.
Variable rates tend to be lower than fixed rates because you don’t have the security of knowing your mortgage rate throughout your term. It’s impossible to say which is the best mortgage type as they both have positives and negatives.
The Bottom Line
If you have found your dream home and you’re ready to purchase it, the last step tends to be finding the perfect mortgage. Fortunately, Calgary mortgage rates are currently low and finding the perfect one can be easily done with some searching. You don’t have to settle for the first lender you talk to because you think they are your only option. There are plenty of great options in Calgary; you just need to decide which type you’re looking for.
Do you want an open or closed mortgage? A fixed or variable rate? Ultimately, each type has its benefits and its downfalls. You simply need to decide which suits your needs specifically. When you are searching, it is important to not only look at the rates but also the penalties, conditions, and more. You won’t want to sign up for a loan because it had a low rate only to find out later that you’re stuck paying fees you didn’t know about.
If you’re still unsure, talking to a mortgage broker first may be a good place to start.
