If you ever decided to switch lenders, you would then need to hire a real estate lawyer to help get you out of your collateral loan agreement.
After your offer on a home has been accepted, and it passes the home inspection, you’ll sit down with a mortgage broker or lender to get your mortgage financing ready.
A collateral mortgage is a readvanceable mortgage product, meaning that your lender can lend you more money as your property value increases without having to refinance your mortgage.
Conversely, when inflation is low, the Bank of Canada will decrease the prime rate to stimulate the economy and improve the attractiveness of borrowing.
In terms of the discount/premium on the prime rate applied to variable rates, mortgage lenders set this based on their desired market share, competition, marketing strategy and general credit market conditions.
Fixed rates are also slightly more popular with younger age groups, while older age groups are more likely to opt for variable rates.
You can think of the difference, or spread, between variable and fixed mortgage rates as the price of insurance that lending rates will not increase, more or less.
Though the prime lending rate may fluctuate, the relationship to prime will stay constant over your term.
To understand how this works and see what it means for your monthly mortgage payments, watch the video above.Then look at the chart below, to see the average mortgage rates offered by mortgage brokers on our site over the last five years.Fixed mortgage rates , at 66% of total mortgages, are most common; however, 29% of mortgages, a significant minority, do have variable rates .One of the first decisions homebuyers and mortgage shoppers face is whether to select a fixed rate or variable rate mortgage.With a fixed rate mortgage, the mortgage rate and payment you make each month will stay constant for the term of your mortgage .With a variable rate mortgage, however, the mortgage rate will change with the prime lending rate as set by your lender.