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When should I lock in my mortgage rates? (and how to make the decision)

“Always pick your yard based on your Summer lifetstyle.”

~ KARL

April 23, 2018 - Karl Yeh

Are you on a variable rate mortgage? Wondering when's the best time to lock in? In this episode, we discuss when should you lock in your mortgage rates and what are some key items to look at (i.e. prime rate) before making the decision. We also look at if you can lock your mortgage rate at any time or if you need to get a new mortgage. 

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Transcription:

Hi everyone and welcome to another addition of Homebuyer's School.

Today I'm joined by Mujtaba Syed, Manager -  Mobile Mortgage Specialist with TD Canada Trust.

and  the question we're going to answer is:

Should I lock in my mortgage rates?

Mujtaba Syed:             

[00:00:30] That's a good question to ask. I get that asked quite a bit from my clients.

Currently right now, if you're currently in a variable, because if variable rates were lower, prime rate was lower, and decided hey I want to get the lower rate, it's a great time to actually lock in right now as we are expecting rates to kind of go up significantly.

We are expecting prime to go up at least two more times this year, and just as a reminder the prime rate is our historical low prime rate which is not normal.

We are expecting prime [00:01:00] to actually go up eventually, and when it does it will actually impact your mortgage rates, and your payments, so if you can get yourself a very good rate with a very good term, I would definitely recommend locking in.

But once again it kind of depends on your situation.

If you're okay taking a risk, and if you feel like overall the rates might drop, it's also a good conversation to have with your banking specialist to see if that fits in with your timeline, or any future plans that you might have [00:01:30] .

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Can I lock in my rate at any time, or do I have to actually lock it in when I get a new mortgage?

Mujtaba Syed:             

With a variable rate most banks actually give you option to actually lock in as there is a risk associated with a variable.

If rates are going up, they do actually let you lock in to whatever term is left remaining on your variable.

For example, if you have a five-year variable, banks do actually let you lock in for anywhere between a three-year fix all the way up to a five-year fixed, what's available at that time.

Karl Yeh:                       Great. Do you have anything else [00:02:00] to add?

Mujtaba Syed:             

I would say once again, it's a great conversation to have if you feel like you want to stay into a variable.

Have a conversation with your specialist to see how that is going to affect you if the rates ever do go up.

If you're comfortable with the rate rising, and you're comfortable with your payments, discuss that with them, or feel to discuss if fixed rates are a good option for you at this time.

Karl Yeh:                      

Perfect. Well, thank you very much Mo. Thank you very much everyone for joining us. Remember to watch our videos on the New Mortgage Rules in [00:02:30] Canada. Have a good day.

Recommended watch:

So of our other videos that you may be interested in watching related to this topic are:

What's the difference between variable and fixed-rate mortgage?

New mortgage rules and stress test

How to compare mortgage rates between the banks in Canada?

How much can you get pre-approved for a mortgage?

 

Your turn:

Let us know if you have additional mortgage questions or home buying questions that we can answer by submitting them in the comments section below. 

Homebuyer's School publishes new content weekly so subscribe or check back regularly for the latest information, strategies and tips from homebuying experts. 

About Mujtaba Syed:

Mujtaba is an experienced mobile mortgage specialist with a demonstrated history of working in the banking industry. Skilled in Negotiation, Commercial Lending, Banking, Sales, and Credit Analysis. Strong product management professional.

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