Seasons Greetings Everyone,
My name is Taylor Bazinet, from TAB|Mortgages of Mortgage Man DLC.
Welcome to our Newsletter! Here we will be sending you insights, information, strategies and everything we find important to the world of mortgages. Guiding you to the best mortgage, where you feel confident and happy. We know how important your home is. Our goal is to keep you as comfortable as we can, so let’s ‘Bring You Home’.
A very exciting time as the holidays are around the corner, but what can make it more exciting… A RATE DROP!! I am so excited to begin my newsletter by sharing this exciting news. Rate drop of 50 basis point. Whenever a rate drop happens that is very exciting but, what does that mean for you? What are Basis points? Will your mortgage payment go down? A Basis Point is a unit of measurement. 1 Basis Point or (BPS) is 1/100 of a percent or 0.01%. They are used to clearly communicate the changes in interest rate. For example if the lending rate were to change from 5% to 6% does that mean 1% or 20% increase. To say an increase of 100 basis points makes this much more clear. Does this mean your mortgage payments will lower, because the bank of Canada lowered its rate by 50 BPS?
Well it might, that is if you are in an adjustable rate mortgage. If you were on a fixed or variable rate mortgage and are not up for renewal yet then no, your payments will remain the same until your terms ends and come up for renewal refinance or switch your mortgage. Let’s dive a little deeper shall we.
If you were on a variable (VRM) or adjustable (ARM) mortgage your mortgages will change. payments will fluctuate with the market, it is a high risk high reward method. Right now you would be rewarded from the news earlier this week, as your monthly payments should reflect that of the market trends.
In an adjustable mortgage (ARM) your payments might change. For example, if your mortgage is $2,000 ($1,000 to interest and $1,000 to principal) as Prime dropped you could pay $950 to interest and $1,000 to principal. So your mortgage payment would be $1,950
In a Variable mortgage (VRM) your payments will remain the same but the amount to principal and interest will change. For example if you pay $2,000 a month for your mortgage and we used the same numbers. $1,000 for interest and $1,000 for principal. If Prime lowers, your payments would look like $950 to interest and $1,050 to principal. Still equaling $2,000 monthly mortgage payments.
If you are in a Fixed rate mortgage. Well this might not excite you unless you are approaching the end of term. Your $2,000 dollar mortgage will remain the same until we refinance, switch or renew at the end of your term.
If you are looking to enter the market, or to further expand your real estate portfolio. Reach out or stay tuned. We will further discuss what this means for you. Reach out if you have any questions if you fall into this group let’s ‘‘Bring You Home’ !