Canadians prefer fixed-rate mortgages
The RBC is the largest residential mortgage lender in Canada and one of the country’s largest banks as measured by assets and market capitalization. RBC’s 19th Annual Homeownership poll was conducted between January 24 – 30, 2012 and uncovers a few interesting points.
A) 42% of Canadian home buyers say they would choose a fixed-rate mortgage
More Canadian home buyers are choosing to lock in fixed-rate mortgages, double those who prefer variable rate mortgages (21%). With many homeowners wanting to maximize their cash flow, preference for fixed-rate mortgages has risen 2% since 2011.
Consumers want the peace of mind that comes with a fixed mortgage rate, knowing their rate will not change during the life of their term. A set mortgage payment makes it easier to budget and plan.
B) 62% of Canadian home owners are taking advantange of low interest rates to pay down more principal on their mortgages
With low mortgage interest rates across the nation, home owners are looking to pay off their mortgage faster by paying down their principal using prepayment options. In addition, home owners are becoming more confident with their finances as 55% say they do not think possible interest rate hikes will cause them financial difficulty, an increase of 6% over last year’s number.
C) 56% of home owners say getting the “best rate” is top priority
It’s no surprise that getting the best mortgage rate possible remains the top priority for home buyers. Next on the priority list, 43% of homeowners said being able to trust and depend on a loyal lender is important, while 33% said convenience plays a significant factor when selecting a mortgage.
Your mortgage should fit with your financial plan and leave room for payment flexibility for unexpected expenses.
Here are three tips to choosing the right mortgage:
- If you have a closed mortgage, you may be eligible for double-up payments or the ability to pay lump sum amounts to your principal without prepayment charges. You could save thousands of dollars in interest costs if your prepayments are applied directly to the principal balance over the life of your mortgage.
- A mortgage specialist and a mortgage calculator will help you determine how much your mortgage payments could increase based on a possible rise in interest rates. Using the mortgage calculator can help prepare you for any rate hikes preserving your peace of mind.
- Jump at the chance to renew early! Some mortgages allow you to renew up to 120 days before the end of your term. This means you can lock in a lower mortgage rate if you see it available.
To learn more about your mortgage options, visit Ratehub.ca’s education center, which provides information on everything you need to know about the housing process made simple.