When looking to take out a mortgage on a new home, whether it be an investment property or your primary residence, one of the most important factors to consider in the decision-making process is the mortgage interest rates. These mortgage rates can determine how much house you are able to get for your investment. With mortgage rates being historically low in the current climate, there is no better time to take out a mortgage than right now. Let’s take a look at what sort of rates you can expect in the current market, and what sort of savings you can expect to see on your investment in the long term.
Canadian mortgage rates are currently at a record low, and they have the potential to even go down by a bit more in 2021. Compared to a few years ago, the time to buy and sell homes has never been better! Currently, mortgage rates are sitting as low as 1.44%. When we compare this to 2017 where rates were as high as 4%, we can begin to understand how much cheaper purchasing a home really can be. Let’s take an example of purchasing a $500,000 home to show exactly what kind of savings you can expect from your investment.
In 2017, a home that would have cost $500,000 with a down payment of $25,000 (5%) at a mortgage rate of 4%, with an amortization period of 25 years at a 5-year fixed mortgage type would have resulted in an annual mortgage payment of $31,500 (or $2,600 when broken down monthly).
Currently, the same home with a mortgage rate of 1.44% would result in an annual mortgage payment of $23,760 (or $1,980 when broken down monthly). We can see from this that the savings we can expect to see annually on our investment is approximately $7,750! When dealing with a potentially restrictive budget, these savings can have a huge impact on the quality of the home you are able to purchase, whether it be a primary residence or an investment property.
Another option that is open to you with lending rates being currently so low, is home renovation. If you are not currently in a position to be thinking about purchasing a new home, then the time has also never been better to renovate or make an addition to your existing home. These savings that we have seen on mortgages will also come into effect on home renovation loans given the current historically low-interest rates.
As we can see, purchasing a home has never been more in your favour! Aside from the low rates, purchasing an investment property is a powerful asset to have. It is also important to remember that with these record low mortgage rates comes increased competition. When you are faced with more buyers, bidding wars and higher home prices can be expected as a result. So, what are you waiting for! Contact Mortgage Path Capital for customized mortgage plans specific to each individual scenario! Email us at firstname.lastname@example.org or call our office at (416)840-9326. We are here to help.