Fixed open mortgage rates in Canada are beloved for both their long-term payment stability and the flexibility they offer in paying off a mortgage. You have arrived at the best site online for the most affordable fixed open mortgage rates on the Canadian market. Our collection of interest rates is easy to browse, and you can easily apply for a great open fixed mortgage rate when you click on any rate on this page. Keep reading to find out more about open fixed-rate mortgages, and then choose the best rate for your needs.
What is a Fixed Open Mortgage Rate?
Simply put, a fixed open mortgage rate is the fixed rate of interest charged on an open mortgage. Unlike a closed mortgage, an open mortgage can be paid off at any time without causing the borrower any extra fees. Due to the uncertainty of when an open mortgage will be paid off, lenders tend to charge higher fixed interest rates on open mortgages than they do on closed mortgages. This helps them recoup any losses when a buyer pays off his or her home before the end of the settled term.
In any case, fixed open mortgage rates are still based on the Canadian bond market. Because they are fixed, you never have to worry about the interest rate changing and causing your principal and interest payments to increase or decrease. This is great for those who prize budget stability and want to know with certainty the amount that they must pay the bank each month.
There are several other pros and cons when it comes to fixed open mortgage rates in Canada. Here are a few of them that you should know about:
• No Fear of the Unknown — Variable open mortgage rates are often lower than fixed open mortgage rates, but that situation does not always last long. There is always the potential that variable rates will go up and exceed fixed rates during your loan term. With a fixed rate, you never need to worry about that, so you never have to face drastic payment increases in the future that will wreak havoc on your budget. In turn, you have no fear of the unknown and greater peace of mind with this mortgage.
• No Pre-Payment Penalties — Pre-paying a closed fixed-rate mortgage loan can be incredibly expensive. The fees that are charged are generally high and truly penalize homeowners. You do not want to pay any more to the bank then you have to, so the ability to pay off an open mortgage without extra fees is definitely a plus.
• Higher Rates — As noted, the ability to pay off an open mortgage early without any penalties comes at the price of a higher interest rate than what you can get on a closed mortgage. This may not make an open mortgage worth it to you even when fixed rates are relatively low. A closed mortgage may be more affordable.
• Inflexibility — Despite the advantage of being able to pay off an open mortgage early without any penalties, a fixed mortgage is always less flexible than a variable mortgage in terms of getting the absolute lowest rates. Variable rates are generally lower than fixed rates, and even when variable rates are not more affordable than fixed rates, current fixed open mortgage rates may improve and decrease after you sign for your loan. With an open mortgage, you can refinance to get the lower rate without penalties, but the closing costs can still be significant, and it is inconvenient to refinance your home frequently.
Will You Benefit from a Fixed Open Mortgage Rate?
Whether or not you will benefit from an open fixed-rate mortgage depends largely on your financial situation. If you are expecting to come into a large sum of cash in the future that will enable you to pay off your open mortgage, an open fixed-rate mortgage is probably the right product for you. Otherwise, the interest rate on an open mortgage will take more money out of your pocket than a closed mortgage, which means that a closed mortgage is likely the right option for you if you have no idea whether or not you will be able to pay off your loan early.
You may also benefit from an open fixed-rate mortgage if you expect to move in the near future. With an open mortgage, you do not need to worry about selling your home and paying off your mortgage because it will be easy to do so without incurring extra charges. If you are planning on staying put for some time, a closed fixed-rate mortgage is likely better suited to your needs.
More on Open Fixed-Rate Mortgages
There are more things you should know about open fixed-rate mortgages before you sign for your funds. This list represents just a few of them:
• Closed mortgages can charge a prepayment penalty as high as 20 percent of your remaining loan balance, which explains why open mortgages are so popular.
• The five-year fixed mortgage term is the most popular term in Canada, whether it is an open mortgage or not.
• Short open fixed-rate mortgage terms such as six months and one year are popular with those who think that they will soon have enough cash to pay off their mortgage but are not yet absolutely certain about their short-term financial situation.
Applying for the Best Fixed Open Mortgage Rates
We could continue talking about low Canadian fixed open mortgage rates, but you are better off applying for an open fixed-rate mortgage and experiencing its advantages for yourself. Choose any of the interest rates on this page or complete the online mortgage application form to apply for a fixed open-rate mortgage.
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