While 5-year terms remain the preferred choice for many Canadians, there’s a noticeable uptick in interest towards short-term fixed-rate mortgages. Let’s dive into how your mortgage term should harmonize with your financial goals.
For those anticipating an upward trend in interest rates, a long-term mortgage might be the perfect fit. This strategic move eliminates the need for rate negotiations in the coming years, shielding you from potential spikes in interest rates. Moreover, a lengthier mortgage term is well-suited for homeowners planning to stay put for five years or more. This provides the stability of fixed payments amid economic unpredictability.
Conversely, if market indicators suggest a potential rate decrease, opting for a short-term fixed-rate could be a good decision. You can minimize interest-carrying costs by locking into a lower rate after two or three years.
Choosing between a short-term fixed-rate or long-term fixed-rate mortgage also hinges on your house plans. A shorter term is advantageous if you plan to sell your property within the next two or three years. Choose a term that matches your timeline so that when you sell your home, you can avoid a penalty or pay a lower penalty. Get expert advice from your mortgage broker.
The best mortgage for you is the one that most closely aligns with your financial situation, short and long-term plans, and risk tolerance. It’s about finding the perfect match that meets your current needs and sets the stage for a secure financial future.