Blog Post

In the Middle of a 10 Year Term? You Have Options!

Anita Groves • April 3, 2018

If you bought a house, or had a mortgage renew roughly five years ago, there’s a chance the struggling economy and the relatively low interest rate environment (at the time) influenced you to “play it safe” and lock in a mortgage term for the next ten years. Because, at the time, it seemed like interest rates couldn’t go any lower and the difference in the interest rate between the five year fixed term, and the ten year fixed was negligible. Five years extra security made a lot of sense.

Without the benefit of a crystal ball, this looked like a good decision. However, unfortunately as interest rates have dropped even further, you’re probably now stuck in a mortgage with a rate that is higher than what is currently being offered on the market. If you are second guessing your original decision. Don’t. You made a decision based on the information you had at the time, if rates would’ve gone up, you’d be in a great place now. But, as that isn’t the case, the best we can do is look for a silver lining, and here it is, did you know that there is a mandatory fine print clause in your ten year contract that might help you save money over the next five years?

After the first five years of a ten year term has been completed, the penalty to break the mortgage is three months interest, instead of the interest rate differential penalty. That’s a really big deal!

It doesn’t matter which lender you are with, this is actually a law in Canada, and not conditional upon the contract you signed with your lender. So, if the thought of an outrageous penalty has been keeping you from looking at all your options, you should really check out what is available on the market today.

Interest rates are really low, so low in fact that there’s a chance you can switch out of your ten year rate into another mortgage product at a lower rate and not only cover the cost of the three month interest penalty, but actually be further ahead only a couple years into your new term. The real goal is to save thousands of dollars by switching, and that is very possible!

As each person’s financial situation is different, rather than going through a hypothetical situation where we explain how this all works for hypothetical people, if you have made it this far, chances are this applies to you. You should really reach out and contact me to see about all your options, because you have options!.

There’s no cost for my services, so let’s see how much money you can save over the next five years!

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Anita Groves

PROFESSIONAL MORTGAGE BROKER

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Fixed or Variable Mortgage? How Canada’s Economic Shifts Could Impact Your Decision

By Anita Groves • February 24, 2025

Navigating Mortgage Rates in an Uncertain Market With Canada’s economy facing trade tensions, inflation concerns, and a potential slowdown, mortgage rates are in flux. Borrowers must weigh the risks and rewards of fixed vs. variable rates to make the best decision for their financial future. What’s Driving Mortgage Rate Changes? Several key factors are shaping the mortgage landscape: Trade Uncertainty – New tariffs between the U.S. and Canada could push inflation higher, impacting bond yields and fixed mortgage rates. Inflation Pressures – If inflation stays above the Bank of Canada’s 2% target, rate cuts may be delayed, keeping borrowing costs higher. Recession Concerns – If economic growth slows, the BoC could cut rates, making variable-rate mortgages more attractive. Fixed vs. Variable: Which One is Right for You? 🔒 Fixed-Rate Mortgages: ✅ Predictable payments for peace of mind ✅ Protection from future rate hikes ❌ Typically higher initial rates ❌ Costly penalties if you break your term early 📊 Variable-Rate Mortgages: ✅ Lower starting rates with potential for savings ✅ Easier to break or refinance if needed ❌ Payments can fluctuate with rate changes ❌ Higher risk if inflation pushes rates upward What’s the Best Move Right Now? ✔ Go Fixed if you want stability and protection from rising rates. ✔ Go Variable if you believe rates will drop and you can handle some risk. ✔ Consider a Hybrid Mortgage to get the best of both worlds. Stay Flexible & Informed Mortgage rates are unpredictable, and the best choice today may change in a few months. Working with a mortgage professional can help you navigate these shifts and secure the best deal for your financial future. Need expert guidance? Reach out today to discuss your options!

How to Ensure a Smooth Home Purchase

By Anita Groves • February 19, 2025

Chances are, buying a home is one of the most important financial decisions you’ll make in your life. And as mortgage financing can be somewhat confusing at the best of times, to alleviate some of the stress and to ensure your home purchase goes as smoothly as possible, here are six very high-level steps you should follow. While it might seem like the best place to start the home buying process is to browse MLS on your phone and then contact a Realtor to go out and look at properties, it’s not. First, you’re going to want to work with a licensed independent mortgage professional. When you work with an independent mortgage professional, instead of working with a single bank, you’ll be working with someone who has your best interest in mind and can present you with mortgage options from several financial institutions. The second step in the home buying process is to put together a mortgage plan. Unless you have enough money in the bank to buy a home with cash, you’re going to need a mortgage. And as mortgage financing can be challenging and not so straightforward, the best time to start planning for a mortgage is right now. Don’t make another move until you discuss your financial situation with an independent mortgage professional. It’s never too early to start planning. As part of your mortgage plan, you’ll want to figure out what you can afford on paper, assess your credit score, run some financial scenarios, calculate mortgage payments, and have a clear picture of exactly how much money is required for a downpayment and closing costs. You’ll also be able to discuss which mortgage product is best for you, considering different mortgage terms, types, amortizations, and features. Now, what you qualify to borrow on paper doesn’t necessarily mean you can actually afford the payments in real life. You need to consider your lifestyle and what you spend your money on. Understanding your cash flow is the key. Make a budget to verify you can actually afford your proposed mortgage payments and that you have enough funds to close on the mortgage. No one wants to be house-poor or left scrambling to come up with funds to close at the last minute. If everything looks good at this point, the next step will be to get a preapproval in place. Now, a pre-approval is more than just typing some numbers into a form or online calculator; you need to complete a mortgage application and submit all the documents requested by your mortgage professional. Only proceed with looking at properties when you’ve been given the green light from your mortgage professional. When you’ve found a property to purchase, you’ll work very closely with your mortgage professional to arrange mortgage financing in a short period of time. This is where being prepared pays off. As you’ve already collected and submitted many documents upfront during the preapproval process, you should be set up for success. However, remain flexible and provide any additional documentation required by the lender to secure mortgage financing. Once you have firm lender approval and you’ve removed conditions on the purchase agreement, don’t change anything about your financial situation until you have the keys. Don’t quit your job, don’t take out a new loan, or don’t make a large withdrawal from your bank account. Put your life into a holding pattern until you take possession of your new home. So there you have it, six steps to ensuring a smooth home purchase: Work with an independent mortgage professional. Put together a mortgage plan. Figure out what you can actually afford. Get a pre-approval. Provide the necessary documentation. Don’t change anything about your financial situation until you take possession. If you’d like to discuss your personal financial situation and find the best mortgage product for you, let’s work together. We can figure out a plan to buy a home as stress-free as possible. Please connect anytime; it would be a pleasure to work with you.