Low Interest Mortgages and Home Equity Loans
As mortgage and loan interest rates begin to slowly creep up again, it’s a good time to review your current mortgage or home equity line of credit and see if you are getting the best deal.
How do Interest Rates affect a Mortgage Payment?
When you go to a bank to negotiate your mortgage, the lending officer has some room to negotiate a mortgage rate. With a mortgage broker, he or she will shop around using his or her wide range of resources to find an even lower rate. Yet does it make much of a difference?
Let’s take a look at how amortization works. In Vancouver, the average price of a home is about 1 million, and the average price of a condo is close to $370 000. (see http://www.cbc.ca/news/business/house-sales-in-toronto-vancouver-leap-in-august-1.1362271)
With those numbers in mind, the average mortgage hovers around 400 000 plus. If we take a mortgage of 400 000 and amortize it, or set the payment rate, over 25 years, for a 5 year period, your payments would look like this:
3.89% 5 year low interest rate Closed Mortgage
Monthly Payment: $2080.30
Interest paid over the 5 Year Term: $72 355.19
Interest paid over 25 years: $224 029.06
Balance left at the end of 5 years: $347 537.19
So Do Interest Rates Matter?
If we look at a current 5 year fixed rate of 5.29% for a closed mortgage, we get these numbers:
5.29% 5 Year Closed Mortgage
Monthly Payment: $2392.89
Interest paid over the 5 Year Term: $99 183.37
Interest paid over 25 years: $317 755.39
Balance left at the end of 5 years: $355 609.97
The difference is shocking!
Over a 25 year period, you will pay an additional $93 726.33 for the same property with just a difference of 1.4%! Even over just 5 years, you will pay an extra $26 828.18 in interest. That’s over $5365.64 a year – just in interest payments. Your mortgage will also be larger at the end of the 5 years by an additional $8072.78. When you add up the numbers, it is shocking!
Get the best Mortgage or Home Equity Loan Rate you can
When you go to a big bank, the mortgage or loan officer will show you the rate they can offer with a sales pitch letting you know that this is the best you can do. But is it? Have you negotiated for the best rate? Do you even like to negotiate?
As you can see, even a slight difference in interest rates can have a big impact on how much money you will have to spend to pay for your loan or mortgage.
To qualify for the best mortgage and loan rates you need to:
- Maintain a good credit rating, by building it carefully over time and by always making your payments on time. For more ideas about building your credit, see our article: “You CAN improve your Credit Rating!”
- Use a mortgage broker to get you the best rates. The mortgage broker will use his/her years of experience to find you the best rates for your particular financial situation.
- If you have a mortgage, or savings to use as equity, it will make your chances of getting a lower rate much higher
- If you already have a mortgage with a good history of payments, this will help as well
Why work with a Mortgage Broker?
A mortgage broker will consider your financial situation carefully and work hard to get you the best deal possible. It is in a mortgage broker’s best interest to protect your financial interests, use his/her years of professional experience and negotiate the best interest rate possible. Learn more about how a mortgage broker can help you get the best deal.
When you go to a big bank, you are at the mercy of the lending officer and it is up to you to negotiate your own rates. So many people just accept the first rate offered, when that is not necessarily the best they can do. In order to get the lowest interest rates on Mortgages and Home Equity Loans, it is best to work with a mortgage broker to get you the best deal you can for your particular financial situation.
Contact One Stop Mortgage Corp today and get the best mortgage or loan rate for your particular financial situation. Even if you are self-employed, or have a poor credit score, we can help you. Since 1994 we have helped people get the best mortgages and home equity loans to fit their lives. Contact us today and find out how we can help!
A simple phone call to 1-877-874-8988 or 604-874-8988 or an email to firstname.lastname@example.org can help you find the best loan product to fit your needs, reduce the interest payments and improve your credit rating and credit score.
Even if the bank turns you down, or your credit-rating is not accepted elsewhere, we can help.