Interest rates are rising, or at least that is what happened this summer. It appears that more increases are on the horizon, according to experts and observers in the industry. That can prove to be a little disconcerting if you are in the market for a new mortgage in Windsor. The age-old debate over variable versus fixed mortgage hinges on where the interest rate trends fall.
Knowing what option to choose can leave you feeling frustrated and overwhelmed. You want to make the best decision for you and your family when it comes to your Windsor home. While researching options, remember to reach out to the experienced team at Axiom Mortgage Solutions. We can sit down with you, help you assess the mortgage landscape, and decide on a plan that fits your financial needs.
How Rates Affect Your Mortgage Type
Understanding the different types of mortgages can help you make better decisions in light of future interest rate increases. Here is a basic breakdown:
- Open Mortgage – You have the flexibility to pay down or off your mortgage at any time. The rate you pay will generally be a little higher than a closed mortgage, and it is tied to the bank’s prime rate. You can still get a fixed or variable rate for your term.
- Fixed Mortgage – This financial product gives you peace of mind since you are locked into a specific rate at the time of closing, and your payment will not change over the life of the loan. If you cannot buffer the ebbs and flows of rates, this option can be very beneficial.
- Variable Rate Mortgage – As the name suggests, the rate you pay will adjust as lenders make changes to their prime rates. When they are lower, you can save quite a bit of money. As they rise, you can see an increase in your monthly payment. If you are willing to ride out the continuing changes within the market and can handle the fluctuation, this option may be for you.
- Secured Line of Credit – Some homeowners have equity in their real estate that they want to use to fund other projects or ease cash flow issues. The interest you pay is based on the prime rate and can be slightly more than what banks pay.
- Second Mortgage – Often used to manage bills and other debts or investments, a second mortgage will usually have interest rates higher than a first mortgage.
Work with Experienced Mortgage Brokers at Axiom Mortgage Solutions
Avoid making a rash decision on what type of mortgage to obtain. The friendly and experienced mortgage brokers at Axiom Mortgage Solutions are here to help you find the right financing vehicle for your needs. Get comprehensive advice when you visit us at our convenient locations in Leamington and Tecumseh. We are happy to answer all your questions to get you on the best financial path possible.