In summary, it depends on your financial goals and strategy for paying off the mortgage. If you plan on making extra payments to pay off the loan ahead of schedule, an open mortgage might be a better option as it doesn’t have a prepayment penalty. However, you’ll pay a higher interest rate. On the other hand, a closed mortgage has a lower interest rate but limits your ability to make extra payments or pay off the loan early. You should consider your financial goals and evaluate the trade-offs before deciding which type of mortgage is right for you. It may also be helpful to speak with a mortgage broker to understand the options available to you in Okotoks.Okotoks Two Year Fixed

An FAQ for Okotoks Mortgage Customers

We’ve created a list of the most frequently asked questions from our Okotoks mortgage customers along with the answers from the Whalen Mortgages Okotoks team.

Why should I compare Okotoks mortgage rates?

It is always advisable to compare mortgage rates to ensure you get the best deal. Shopping for a mortgage can be made easier with the help of a Okotoks mortgage broker, who can assist in comparing interest rates and loan terms. It is important to not only shop for a lower interest rate when purchasing a home, but also when renewing a mortgage. Most homeowners renew their mortgage with their current lender, but it is possible to negotiate for better terms or switch mortgage lenders without penalty. It is important to take advantage of the opportunity to shop around for the best mortgage options during renewals.

What is the difference between fixed rate and variable rate mortgages?

A fixed rate mortgage offers stability as your monthly payments are set and won’t change even if interest rates go up. Fixed rate loans generally have a higher interest rate compared to variable rate loans because the lender is taking the risk that they will lose money if interest rates rise.

On the other hand, variable rate loans are tied to the Bank of Canada’s interest rate and tend to have a lower interest rate. However, if interest rates go up, your monthly payment will also increase.

If you want to switch from a variable rate to a fixed rate mortgage, you may have to pay a three month interest penalty. A 1-year or 2-year fixed rate mortgage is a good compromise between a 5-year fixed and a 5-year variable rate mortgage, especially if you think interest rates will fall.

It’s always advisable to compare mortgage rates and terms, and work with a Okotoks mortgage broker to find the best option for you.

Should I get an open or closed mortgage?

The answer to this depends on whether or not you’re really going to pay down the loan ahead of schedule. A closed mortgage limits how much money you can pay toward the loan balance as well as when. It may even prohibit it altogether unless you pay a prepayment penalty. An open mortgage doesn’t have this prepayment penalty. On the other hand, you’ll pay a higher interest rate whether or not you make those extra house payments.

Know that there are a variety of ways you could pay off the loan faster. For example, you might want to pay biweekly instead of twice a month. Or choose a shorter mortgage term. While a 15 year mortgage comes with a higher monthly payment than a 25 year mortgage, you’re forced to pay down the loan balance faster, too.

What is a rate hold?

Imagine that you walk into a mortgage lender in Okotoks and ask them how much you’d pay in interest on a home loan. They give you a price quote of 3% as of that day. That quote is based on today’s interest rate, which changes frequently.  The rate hold is simply how long they promise to agree to that quoted interest rate.  After that point, they’ll still extend a mortgage to you but the interest rate would be whatever the rate is that day. Lenders typically have a rate hold of 30 to 120 days. Consult with a Okotoks mortgage broker to find lenders with the lowest interest rate and longest rate holds.

Call your dedicated experienced Okotoks Mortgage Brokers today to get the lowest mortgage rate.