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One Year Fixed Mortgage Rates Lethbridge
Lethbridge residents rarely know about options like a one year fixed rate mortgage, demonstrated by the fact that less than five percent of mortgage customers have this type of loan. However it has many paybacks.
What Is a One Year Fixed Rate Mortgage?
First, it is a fixed rate mortgage. Your interest rate is locked for a twelve month term. But the loan is only one year. Then it comes up for renewal. This allows you to negotiate the interest rate at that point. This gives you more flexibility when interest rates are falling. Lenders may give you a lower interest rate than a five year fixed rate loan, because there is less risk of them losing money if interest rates rise.
A 1-year fixed rate mortgage is a fixed rate loan. This means the interest rate won’t change every time the Bank of Canada changes their interest rate. You can negotiate the loan at the renewal period, and your loan will be fixed if and when you renew it.
Why Should You Get Fixed Rate 1-Year Mortgage?
A fixed rate mortgage is ideal for those who are afraid of interest rate swings. A shorter loan term such as a 1-year fixed rate mortgage is a good compromise between the flexibility of an ARM loan and a five year fixed rate mortgage. You could in theory reset your interest rate every year you own your home. And there is no penalty like the three month interest payment due if you refinance the standard variable rate loan, rather you wait until your 1 year is up for renewal then refinance the mortgage. You certainly avoid the hefty fee that comes with breaking a five year fixed rate mortgage.
A 1-year fixed rate mortgage lets you start building equity in a home you don’t know that you’ll keep long-term. You’ll build equity in the property. You can simply renew the home loan at the terms your Lethbridge mortgage lender offers. Or you can have Whalen Mortgages Lethbridge shop your home loan with its network of lenders to find a better rate. If you move, you don’t have to pay a penalty for breaking the mortgage or try to “port” the mortgage to the new property. You’re free to get another home loan with better terms.
Note that this means a one year fixed rate mortgage is a good choice for those with bad and recovering credit, too. One year of regular house payments may make you a more attractive customer to lenders and allow you to qualify for a lower interest rate in 12 months. Talk to a Lethbridge mortgage broker to understand your options. Talk to a Lethbridge mortgage broker to find a lender that offers this mortgage product.