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FREQUENTLY ASKED QUESTIONS

I've been a loyal customer for years, won't my bank give me the best rate?
You would assume that following years of loyal patronage to your bank that when it comes time to negotiate a mortgage, your loyal bank would respond in favor by offering you the best possible rate available. This is simply not the case. How much do they really value your business? Not usually enough to stop their loyal customer shopping the mortgage proposal elsewhere.

Does it make any difference that I have all of my banking activities with one bank?
It is increasingly more common for most individuals to have banking activities spread amongst various banks and lenders today as more than ever before. Most of us take advantage of the competition between the banks for our business. It is not unusual to have a visa card here, a personal loan there, and a mortgage elsewhere. Unfortunatley, few of us are rewarded by our banks anymore for maintaining our loyalty.

How Can a Mortgage Broker Get me the Best Interest rate?
Mortgage Broker's facilitate high volumn business with most of the major banks. The banks save money by allowing brokers to establish new mortgage customers for them. This intelligent approach is a win/win for everyone. Banks downsize resulting in less overhead costs, the broker industry thrives, and the customer wins by obtaining wholesale interest rates without the hassle.

Does a 1.00% mortgage really exist?
Yes, it does. Commonly referred to as Variable Rate mortgages, and structured as an open or closed mortgage with an interest rate at or below the prime rate. Some have a low introductory interest rate for a period of months. These mortgages have been very popular recently with declining interest rates. So popular that there is simply a plethora of products now available, each bank offering slightly different options. They can be complex, and it is recommended that you consult a broker to understand how they compete and compare.

Am I better locking in with such low interest rates?
It is a fact that interest rates are the lowest they have been in over 40 years. Whether you lock in, or leave your mortgage float with prime depends more on your own personal situation, your level of comfort, and objectives with respects to your property purchase. Again, a broker can help you determine which mortgage is best suited to you and why.

I have a variable rate mortgage. When should I convert if rates go up?
Rates will be on the rise, this is inevitable, based on a strengthened economy and business cycle trending. Over the past 11 years, a prime based mortgage has outperformed the best 5 year interest rate. Based on historical trending, you could continue to realize interest savings by leaving your rate float.

What does "amortization" mean?
This can range from 10 years to 25 years, and refers to the length of time you will have paid off your mortgage given a specific payment and interest rate.

What does "term" mean?
Term refers to the length of time you lock-in a rate. Terms range from 6 months to 10 years. The longer the term, the higher the interest rate, but the longer the security.

Should I go long or short?
Statistics suggest if you go with short term mortgages, 1 and 2 year for example, that over time, you will have saved money in interest versus going with longer terms such as 5 or 10. However, many people prefer long term mortgages simply for the security aspect. With longer term mortgages, frequent renewal is not required therefore, fears of qualifying at prevailing interest rates at the time of renewal are not a concern.

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