NC)-Did you know if you remove a fixed-rate Mortgage, you're paying a large "safety premium"? That is because banks usually set their fixed rates at considerably higher levels than their variable rates. They do so to make sure that a fixed-rate Mortgage will still be profitable for them if interest rates rise.
If you are a potential homeowner, you need to consider if that premium is worth paying. It may protect you if rates of interest spike up suddenly. However, if they just don't, you might wind up paying lots of money in extra interest. That's a high priced Insurance plan.
Historically, variable-rate Mortgages have proven to be less than individuals with fixed rates in the long run. Even though you believe rates will rise in the longer term, you should please take a long-term perspective. Having a variable rate Mortgage, you're usually getting started with a lower rate to start with, and you will probably make use of any decreases in interest rates that exist in the near future.
Banks and other loan companies provide a variety of variable-rate Mortgages, often with special incentives. CIBC, for instance, supplies a rate of merely one.01% below its prime rate for that first nine months of their Better Than Prime Mortgage. Throughout the 5-year term, it provides rate of 0.25% below prime.
Before selecting the kind of Mortgage perfect for you, confer with your financial advisor or personal banker. You will discover more at your local CIBC branch, or use the internet here at Mortgage Loans.
