INTEREST RATE GUARANTEE
If you are looking for a mortgage to buy a house, or if your mortgage is coming up for renewal, this is a good time to talk to your mortgage broker!
Many lending institutions will guarantee you an interest rate as soon as they receive your application. Generally speaking, the guarantee means that if mortgage rates go up, you will get the old, lower rate.
The length of time of the rate guarantee varies by the lending institution and has nothing to do with the amount you are borrowing or how good your application is, it just depends on the policy of each lending institution. A mortgage broker will be able to give you this information.
If you are buying a house, or switching your mortgage (also called transferring), the guarantee can last from 60 to 120 days (2 to 4 months). The actual completion date of your house purchase (or renewal date) must fall within this time period for the rate guarantee to take effect. If your completion date (or renewal date falls after the rate guarantee runs out, a different rate may apply, depending on whether rates have gone up or down.
Your interest rate is fixed on the day the money is advanced to either your lawyer, or you previous lender if switching.
If your mortgage is coming up for renewal, you should seriously consider switching your mortgage. Your current lender will probably give you a maximum of 30 days for a rate guarantee, and often at posted rates (no discount!). If your renewal date is Dec 1st, your rate can be guaranteed as early as Aug 1st.
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