What to Do With Your Variable-Rate

Variable-Rate Mortgage

The Bank of Canada has made six increases to the policy interest rate over the past year. Prime went up another 0.5%, in October, bringing the prime lending rate to 5.95%.

Inflation has taken a turn for the worst as a result of the war in Ukraine, supply chain issues, and a deepening housing shortage in Canada. As housing, food and energy/gas prices increase, and employment-based wage inflation persists, the Bank of Canada must raise interest rates to maintain the legitimacy and integrity of the Canadian dollar and financial system. 

If you are worried about the unprecedented rate hikes we’ve seen this year and your variable-rate mortgage, here are the steps you need to take:

  1. Call your existing lender and ask what fixed rate you can lock in.
  2. Email me the rate and term your lender quoted. I will give you a recommendation based on your unique situation and tolerance for risk.

While protecting against increasing rates is important, the other main focus is positioning your mortgage to take maximum advantage of lower rates once they start to decline. 

Another consideration is the cost of breaking your mortgage early. If you need to pay your mortgage off and it doesn’t make sense (or doesn’t work) to port your current mortgage, the maximum penalty you will get charged is three months’ interest with your variable-rate mortgage.

Fixed-rate mortgages have higher payout penalties than variable-rate mortgages. This is why it’s an important consideration when determining the best mortgage for you.

Here is some information on the recent rate announcement>>

Don’t panic! If you feel unsure of what to do next and want a review of your mortgage, follow the steps above, reach out and let’s chat. I am here to help and have the resources!

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