Variable Mortgage Rates historically over the last 150 years have been a wise choice in reducing interest costs. This all changed when the Bank of Canada decided to increase Prime rate during these unprecedented times.
As Variable Rate Mortgages have fixed payments, many have reached their “trigger rate,” this happens when your set mortgage payment reaches over 90% of the interest portion hence not applying any funds to reducing your principal. This poses high risks to lenders and clients alike.
So you have been contacted by your lender and advised you must rectify this. Here are a few options to consider:
- Increasing your regular payment
- Paying a large lump sum payment
- Re-financing your mortgage
- Obtaining a 2nd mortgage
All options must be calculated to determine your best alternatives. Factors to consider:
- Does a mortgage penalty apply
- Do you qualify for a mortgage re-finance
- Can you extend your amortization period back to the original period
- Will the lender allow a 2nd mortgage to be placed on the property
Be assured that there are numerous solutions available in the Mortgage Market.
The post Mortgage Matters: Variable Rate Mortgages Reach The Trigger Rate appeared first on Just Sayin’ Caledon.