First Mortgage

Have you ever been watching the television, or reading the newspaper, and seen a spot or advertisement focused on the current rates that a particular bank is offering to home buyers? If you have, then you will probably agree with me that there is never just one rate. Indeed, there are always multiple rates, all somewhat similar to each other, yet still different. Why is this? Well, it is because the rates you are seeing are actually for different mortgage types.

As we all know, having a mortgage is not free. A bank will charge us interest on any amount we borrow. The rate at which this interest is charged is solely dependant on which of those rates you choose in the newspaper. Next to each figure, an explanation will be given to indicate the interest structure applied to the loan. A “fixed” period means that the interest rate you see there in the paper will apply to your loan for however long the term is. For example, a 1 year fixed rate will lock you in to accepting the same rate for 1 entire year. On the other hand, the “variable” option allows your loan to swing between rates as the banks put them up and down. Consider your choice carefully, as the amount of interest you end up paying on your mortgage is directly attributed to this one number.