There are several things you should know about mortgage rates before you make a decision. These include the type of rate you will get, the length of the loan, how much you can borrow, and the down payment you will need.
Prime rate
If you’re looking to get a loan for a home or a car, it’s important to know what the prime mortgage rate is. This rate serves as the benchmark for a variety of other loans. Knowing what this rate is can help you save on your payments, as well as budget effectively for your loan repayments.
The prime mortgage rate is the interest rate charged to the most creditworthy borrowers. While the rate may change from time to time, it’s usually lower than what is charged to less qualified borrowers.
For example, TD Canada Trust recently raised its prime mortgage rate from 2.7% to 2.85%. TD says it has adjusted its rates according to a number of factors.
Down payment amount
If you’re buying a home, the size of your down payment can affect your mortgage rates, your monthly payments, and your lifestyle. It’s a decision that’s unique to you, but a down payment of 20% or more is usually considered a safe bet.
A larger down payment means you’re able to qualify for a lower interest rate. Putting more money down can also reduce your mortgage insurance costs. These extra fees can add up to a huge amount of money each month.
If you’re unsure about what your down payment needs to be, you should talk to your lender or a mortgage loan officer. They’ll be able to help you figure out what you need and which loan is right for you.
Variable rates
A variable mortgage rate is a mortgage which varies with changes in the prime lending rate. The prime lending rate is the rate at which banks lend the most credit-worthy customers.
Variable rates are generally lower than fixed rates, but they can also rise. If you are considering a variable rate, you need to consider whether or not you can afford the extra costs of the mortgage and if you have the means to afford the interest.
Variable rates are best suited for households that have a relatively stable income and can absorb the increased risk. If you have a large down payment and can make payments without much strain, then you are less likely to suffer from the effects of variable mortgage rates.
Annual percentage rate
The annual percentage rate or APR is a good way to look at the cost of your mortgage. The APR is also a good way to figure out whether you can afford to make your house payments. For instance, the APR is an effective way to calculate how much money you can reasonably spend on a new home.
In addition to the APR, a number of other factors should be considered in order to figure out if a loan is a good match for you. Some of the more important factors include the interest rate, the amount of time you plan on making your monthly payments, and your credit rating.