Next to critiquing the decorating taste of your home’s previous owner, playing the “adjustable mortgage game” may rank as one of the most popular (and least pleasant) pastimes of Canadian homebuyers.

Here’s how it works.

As you’re exploring your mortgage options, you review the long and steady slide of mortgage rates in Canada over the last decade and make the decision to go with an adjustable mortgage when you buy, at renewal or when refinancing. You’re now a player. Then you watch for clues about mortgage rate movement, trying to guess the perfect moment to lock in your mortgage. The objective of the game is to try to guess the bottom… and you won’t know it’s the bottom until it’s too late. In today’s low rate environment, we should acknowledge that most of the players are already winners; but it can still be a stress-inducing game.

One way to remove all of the guesswork is to consider a capped-rate adjustable mortgage, although there are only a few options available in the marketplace.

There is a unique adjustable mortgage that is not based on the Canadian Prime Rate (the usual benchmark) - but on what is known as the Banker’s Acceptance rate: a benchmark that is used for professional money managers. In effect, the BA rate, as its known, is the rate lenders charge one another.

Not surprisingly, it’s typically much lower than prime. In fact, the effective rate of this adjustable mortgage has been consistently lower than competitive variable or adjustable rate products based on Prime. A capped version is now available.

An adjustable rate mortgage with a cap offers unlimited downside rate movement, but also provides a guarantee that the rate will never rise more than a certain percentage higher than the starting base rate - no matter what happens to the lending rates.

The rate cap takes the guesswork out of the adjustable mortgage game. If rates continue to drop, your Mortgage rate also drops accordingly. But if rates begin to rise, you know that your own mortgage rate has a fixed ceiling. Imagine, no more worrying about when to lock in your mortgage, and no more second-guessing your decisions when rates go back down again. Of course, this kind of flexibility comes at a small premium over a regular adjustable-rate mortgage.

In the past several years, more and more Canadians have passed on the security of traditional fixed-rate mortgages for the savings potential of an adjustable rate. And in an environment of dropping rates, the adjustable rate choice has proven its value to homebuyers. With today’s rates among the lowest in memory, many homeowners continue to worry about whether or not they should lock in or not. After all, we don’t want to lose the flexibility of having our rate adjustable downward… but we’d also like to have it fixed upward.

If we had a crystal ball, we could make perfect decisions about our mortgage options, and we’d know how to secure the best rate. But a mortgage that passes on declining rates and has a rate cap on the upside can be the next best thing to seeing into the future. And the result is an adjustable mortgage game that the homebuyer is heavily favoured to win.


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“Wow!” you say to your spouse as you hit the brakes on the car. “Did you see the mortgage rate those guys are advertising?” Your worries are over, you’re thinking. Just lock in a rate like that for the next ten years, and you’ve got it made.

Not so fast. That rate may not be the one for you. Typically, the lowest available rate - and the one that makes the rate sign look great from the street - will be for a variable or adjustable-rate mortgage. That rate has the potential to be like a roller coaster. The posted variable or adjustable rate is the rate you’re getting today. Unless you have an economic ouija board, you won’t be able to predict what kind of ups and downs are ahead of you.

Let’s take a closer look. A lender will offer different rates for different types of mortgages. The rates are determined based on financial risk -to the institution and to you. When a customer is willing to take on the risk, he/she is rewarded with a lower rate. If the lender is taking on the risk (that is, the customer is promised a particular rate… regardless of what happens in the future), the rate is higher. The longer the term, the higher the risk for the financial institution.

So how do you decide? Fixed-rate mortgages, because they require a low risk tolerance, are usually better suited to first-time buyers or those who haven’t owned a home for a very long period. Ask yourself these questions: Do you like or need to know exactly what your payment is going to be over a longer period of time? Do you want to avoid the need to consistently watch rates? Do you have less than 25% down? If you answered “yes” to all, or most of these questions, a more conservative fixed-rate ontario mortgage could be the better choice for you.

A variable or adjustable-rate mortgage is best suited to people who have a flexible budget and can tolerate higher risk. Ask yourself these questions: Do you watch market conditions? Can you handle any sudden rate increases that could increase your payment? Do you have 25% or more equity in your home? If you answered “yes” to all, or most of these questions, a variable or adjustable-rate mortgage might best suit your needs.

Some lenders offer a special promotional rate for the first few months of a variable-rate mortgage, which you should discuss with your mortgage broker. Also discuss what your rate will be based on - prime minus 0.5% or 0.6% or on Bankers’ Acceptances (BAs) plus 1%. The latter being a new kind of adjustable-rate mortgage that has recently been introduced to the marketplace. Most variables or adjustables allow you to exercise an option to “lock in” a fixed rate at any time for the remaining portion of your mortgage term or for a longer term.

If the uncertainty of a floating rate is going to give you sleepless nights, you’re in good company. Many Canadians prefer the certainty of a fixed-rate mortgage. They know exactly how much they will pay over the term of their mortgage, and they can plan accordingly… with no financial surprises. But if rates do drop… and drop… and drop… you are committed to the “promise” that you have made. Your best option - have a mortgage broker help you decide which option best meets your needs.


Find the Lowest Rate Loans

When time turns hostile with your finances whittling down day-by-day, don’t pull a pensive face. There are multiple potential solutions that you can bank upon to find a way out. And if you own some property, you are on a higher side to be benefited with bagful money propositions.

People who own a home in the UK can procure secured homeowner loans to take their finances to the top. You have to collate your home to the lender for obtaining money and if your home holds good equity-value you will be offered splendid loan package. Don’t you think

raising funds from your home to better off your financial health is a fair and affordable deal!

Under secured loans you can borrow a large amount of money depending upon your requirements. You can borrow money ranging from £5000 to the maximum of £75,000. There are some lenders who provide with funds exceeding to £250,000, but you will have to scour the UK loan market to crack the best deal.

In the presence of collateral, lenders provide you with the lowest APR. If equity available on your home is good enough with your good repayment capacity, lenders will qualify you for the lowest APR on your secured loans. Depending upon your present circumstances, your APR is determined which starts from an approximate figure of 6% to 20%. With low APR, your monthly repayments will be made small and affordable to be taken care of. It will help you manage your debts effectively and save a few pennies aside to be utilised for some other purpose.

On top of it, you can repay your loans in a time-period of 25 years. It is pertinent to make you aware of the fact that the longer you stretch your loan term, the more you pay for the interest. So keeping in mind your current circumstances, try to make the time duration minimum.

You can also apply online for the secured loans by scouring the loan quotes of different lenders meticulously. This will help you save time and money as well. So apply and upgrade your financial situation efficaciously.