The Bank of Canada is scaring us again – they gave us another half of a percent increase in interest rates. What does this mean for your mortgage? What do variable rate mortgages have to watch out for? Here are all the details:

It was another 1/2% rate increase today—could’ve been worse. A lot of people in the market were expecting a 3/4% increase. So what a 1/2% increase means is if you’re on a variable rate or adjustable rate mortgage, your payments or your interest costs will change by about $29 per $100,000 worth of mortgage. As a refresher for people, with an adjustable rate mortgage, your payments change when interest rates change. With a variable rate mortgage, your payments stay the same but the amount of money that goes towards interest or principle changes. What you have to be aware of with variable rate mortgages is that you can trigger something called a trigger rate. And what happens is the lender says, “Hey, you need, to you know, increase your payments “or make a lump sum payment “because you’re going backwards on your amortization.” And amortization is a fancy way of saying how long it takes to pay off the mortgage. Talk to me if you have any questions!

 About Jason Scott, Edmonton Mortgage Broker

Looking for a personalized mortgage solution? As an Edmonton Mortgage Associate, I’ll be your trusted partner who will help you get the right mortgage for your family home or Investment property. I’m Jason Scott, and I’ll be your Mortgage Broker Edmonton.