The #1 question is, can you navigation is fluctuation of monthly mortgage payment? If you presently live with a tight budget and can’t afford swing with your mortgage payment, it is preferable to go fix. If you are a first-time home buyer, it is also best to consider fixed because transitioning to becoming a homeowner can result into added expenses.

There are two factors influencing mortgages in Canada. The variable rate is determined by the Bank of Canada. 8 times per year Bank of Canada meets to review and assess the economy and based on their analysis they determine what the bench mark rate should be. This bench market rate is also called “Overnight Rate”. Financial Institutions add a risk premium to the bench market rate. Every time the Bank of Canada makes a policy change with the bench mark rate, variable fluctuate in the same direction. The Fixed Rates (1 to 10 years) are based on the Canada bond yield curve. This represents the borrowing cost of the Canadian Government which is considered the reference for the fixed rate. When the yield curve changes, lenders review and make similar changes to their rates.

The best way to find your what your monthly payment will be is to use a mortgage calculator such as the one offered by Easy House Loan. Make sure that you have the following details: total mortgage amount, interest rate, amortization period, payment frequency. Here is a link to our mortgage calculator: https://easyhouseloan.ca/rates/

No, most mortgage commitment have pre-payment penalty if the borrower wants to pay his mortgage before the maturity. The way to calculate the penalty differ from one lender to another but also if you are breaking a fixed or a variable mortgage. The penalty for a variable is generally the equivalent of 3 months interest payment. For the fixed, it is based on the remaining balance, time left until the maturity and interest rate the borrower secured and the posted-rate (which is all most always higher than the rate secured by the borrower). This is highly recommended to contact the customer service of your lender to find out what the penalty will be. Note that there certain type of mortgage that can only paid early if the property is sold, meaning refinancing isn’t even an option.

The first step is that the lender will send you a notification and request the missed payment. Second step is sending the demand letter, it can come directly from the lender or from its legal representative. The demand letter can only be issued 15 days after the initial occurrence happened. If no payment arrangement are taken the next step will be for the lender to instruct his lawyer to start power of sale procedures. This typically happen after 90 days when the mortgage is with a financial institution but with private lenders the legal actions generally start much faster, 15 days after the 1 st missed payment. Once the legal actions are started, notice of sale is issued and technically the lender can sale the property but lenders tend to wait until they have fully possession of the house and that the owners have been evicted. The legal procedures can take some time and they are very expensive. It is highly recommended that the homeowner try to make payment arrangement with the lender to minimize the cost.