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 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.
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-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.