"What is your best rate?" is the most frequently asked question I hear. Of course it is a relevant question. However, it is unqualified and I presume it is an inquiry as to what is the best rate for a 5 year term.
What else should you be considering?
Well, Is a 5 year fixed term the most suited mortgage to your financing needs. Fixed mortgages have a pre payment penalty, typically 3 months interest. Are you going to sell the property in a short time? If yes, you need an OPEN mortgage to avoid the penalty. A short term OPEN mortgage will be at a high rate, so an OPEN variable or a secured Line of Credit would usually be the preferred choice. These options are at prime( currently 6.25%) for Lines of credit or slightly discounted from prime for variables. Are you on a fixed income? If yes, you would be considering a longer term. The rate for a Longer term mortgage would be higher than the 5 year rate. However, securing a long term rate would give you peace of mind that you can afford a fixed monthly payment for lets say 10 years. Have the costs of purchasing and moving left you a bit "tight" or you are looking for a low payment NOW? Have you considered a front end discounted variable? This will allow you even lower payments than a 5 year fixed for up to 1Year at which point you would have the option to lock into a fixed mortgage without any penalty.These are just a few examples of how mortgage financing can be suited to your needs. That being said a 5 year fixed mortgage may be the most suited for you. Of course I welcome the question and will have the best 5 year rate available.There are numerous options as to how a mortgage can be set up to suit you. Do you want to pay your mortgage off as fast as possible? Do want to reduce your monthly payment?( even with the best 5 year rate)
