As expected, the Bank of Canada raised prime rate by 0.50% on June 1st. Watch this short video on what it means for you and your mortgage:
Variable Rates:
Variable rate mortgages or variable home equity lines of credits (HELOC’s), may or may not see a monthly payment increase. Your lender may increase your payment by $24 per $100,000 mortgage or more of the payment will be allocated to the interest, instead of the principal. Your lender will communicate any increase and the effective payment date.
TIP: Increasing your payment voluntarily, is a good option if paying your mortgage off faster is a goal for you.
Adjustable Rates:
You will see an increase to your mortgage payment of about $24 per $100,000 mortgage. Typically, the payment increase comes into effect following your upcoming payment, however it varies by lender. Your lender will communicate any increase and the effective payment date.
Fixed Rates:
Fixed-rate mortgages are not tied to prime rate and aren’t affected.
Should I “lock in”?
If you lock in or convert, you’ll be getting a new mortgage with a fixed rate and new terms.
Locking in does not secure your existing rate. You will be offered a new fixed rate with a term equal or longer than your existing mortgage term. Remember: Fixed-rate mortgages also come with a much larger penalty to break your mortgage (up to 900% higher)! Your mortgage shouldn’t keep you up at night. If you’re still feeling uneasy, please contact me to review your offer.
Lines of Credit (HELOC)
If you owe a considerable amount on your HELOC, it may be a good time to consider converting that HELOC into a mortgage.
I cannot stress enough, if you have any questions or would like to discuss your specific details, please book a call with me.
