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Pros and Cons to Fixed Mortgage Rates in Burlington

Getting a mortgage for your home is a big financial commitment with an overwhelming number of options. One of the biggest questions you have to answer when you buy a home is what type of mortgage rates in Burlington to choose. A fixed mortgage rate is one that does not change over the course of the home loan. Unlike variable mortgage rates, fixed rates will not increase or decrease during the lifetime of your loan. The interest rate is based on Government of Canada bond yields, plus any additional expenses the lender incurs. As with all financial products, there are several pros and cons to fixed mortgage rates in Burlington.

 
Pros of Fixed Mortgage Rates

  • A fixed-rate mortgage loan lets you accurately predict the amount you will have to pay each month for your home’s loan. This will enable the homeowner to determine their budget with accuracy each month. Fixed mortgage rates guarantee payment stability and protect the homeowner against rate rises that can accompany variable mortgage rates that rise and fall with interest rates. If you like consistency and stability, a fixed-rate mortgage is probably the right choice for you.
  • If current interest rates are low, fixed mortgage rates offer future homeowners a very affordable option. Fixed rates should also be considered if you think that interest rates will rise in the coming years and you want to keep your current interest rate.
  • Fixed mortgage rates are much easier to understand for first time homeowners.

Cons of Fixed Mortgage Rates

  • Fixed mortgage rates may not be the best choice for all homeowners. Although you will not have to pay more when interest rates rise, opting for fixed mortgage rates also means that you will not pay less when interest rates decline. This means that there is the potential you could miss out on saving money on your mortgage if the interest rates go lower than the fixed mortgage rate you are paying.
  • Another essential factor to consider is that if you choose a fixed mortgage rate and you want to benefit from falling rates, you will have to refinance. Refinancing your loan could come with penalties and other costs.
  • Fixed mortgage rates may lack the individual customization that lenders offer. Most fixed-rate mortgage loans tend to be almost identical from lender to lender. This makes it difficult to find a fixed rate loan that is customized for your unique situation.
Homeowners who have a set total mortgage payment limit that they can afford will benefit the most from fixed rates. Once you determine the maximum amount you can pay for a mortgage, you can get a fixed-rate mortgage that sets the payment at or below what you can afford. This payment will never change, so there is never any worry as to whether you will be able to pay the loan in the future.
 
When searching for a suitable mortgage, make a list of trustworthy lending institutions, and then compare the interest rates being offered by various lenders you are considering. Since lenders offer both fixed and variable mortgage rates in Burlington, you should choose the most suitable one for you by acquiring the help of a professional mortgage advisor. 

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