If you’re mortgage shopping in Greater Toronto, Ottawa, Kingston, Pembroke or North Bay, and your mortgage is over $200,000, have a look at a 3-year term.
Most brokers now have access to 2.90% on a 3-year fixed, which is near the lowest rate ever for this term. This promotion includes all the normal bells and whistles: 20% prepayment options, double-up payment privileges, portability, a 120-day rate hold, etc.
Despite the great rate, a lot of people shy away from three-year terms, preferring instead the security of a five-year mortgage. At 2.90%, however, you have lots of breathing room.
Amortization analysis suggests that interest rates could rise by 3% and most people may still be better off by choosing a 2.90% three-year term. This assumes:
Successive 3-year terms (i.e., your first mortgage would be at 2.90% and you’d renew at 5.90% in three years)
A 5-year (60-month) comparison period.
Comparison against fully-discounted and fully-featured 1, 2, 4- and 5-year fixed terms, as well as 3- and 5-year variables.
A 3% linear rate increase over five years, beginning in June 2010, and going up every three months thereafter. (This isn’t a prediction, just an assumption for analysis purposes.)
Other things to note:
Pre-approvals are not permitted on this promotion. Clean credit and a 620-650 minimum credit score are required. As always, please consult a licensed mortgage planner for details and to confirm suitability.
Like news like this?
Join our CMT Updates list and get the latest news as it happens. Unsubscribe anytime.
Thank you for subscribing. One more step: Please confirm your subscription via the email sent to you.