This short article talks about top 3 reasons on why 10 year fixed rate is a good option for some clients, especially those wondering, ‘should I get 10 year mortgage’.
Why Get a 10 Year Fixed Rate Reason One – Budgeting
If you have a fixed income, taking advantage of a long term 10 year fixed rate mortgage can definitely be of great benefit. Let’s take a scenario: in today’s market you can go with a five year fixed rate at 3.09% and 10 year fixed rate can be around 3.89%. Assuming that after five years the interest rates rise to, say, around 4.6% or higher, you would be saving money through the 10 year mortgage rate of 3.89%.
Why Get a 10 Year Mortgage Reason Two – Penelties
After five years (in a 10 year mortgage), you only have to pay three months interest to get out of the mortgage. This is currently the lowest penalty available for a fixed rate; much more attractive than facing a much higher interest rate differential (IRD) penalty!
Out of the Box Bonus Tip:
You don’t need to take the equity out of the home. Let’s take an example: you bought a house with 5% down payment. Your house needs to appreciate by 25% to take the equity out, which is not likely over short term. What you can do is turn the current home as rental and buy a new home with 5% down, as rental homes usually need 20% down payment. This is a great way to get into real estate investment.
I hope you found this article about why get 10 year mortgage (fixed rate) useful. Please contact me if you are looking for a mortgage broker in Brampton. For more information about mortgages, and tips and tricks, please visit my other blog posts.
