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Rates Will Increase.
Interest rates are at an all-time low. Everybody knows that. Although there may be some downward pressure in the short-run, in the long term, there is nowhere for the rates to go but up.

Historically, rate declines have been gradual and rate increases have been precipitous. So get ready, when it happens, it will go fast.

Now Borrowers Can Protect Themselves
Just imagine, someone just starting out in the housing market, willing to pay a little more now. So they can protect themselves with the same rate and payment for the next 25 or 35 years.

A Payment Lock Mortgage is an innovative new long-term option for Canadian homeowners, that allows them to lock in their mortgage payments at the beginning, and have the comfort of knowing that the resulting monthly payment will never change.

In round numbers, today’s long-term rate would be in the range of 3.5%. To those of us who have been around for a while, 3.5% is a superb mortgage rate. Today it’s twice the going rate, but those going rates are good for five years only. When the five-year rate is 6% or more and the holders of a Payment Lock Mortgage are still paying 3.5%, the original decision will look pretty good.

Furthermore, mortgageors today must qualify at the stress test rate of 4.79%, while those choosing the PLM, would have to qualify at the contract rate only, say 3.5%.  This difference could be significant.

But what if we want to move or upgrade?
The PLM is totally portable.

But what if we want to break the mortgage?
Those who wish to break their mortgage would pay a penalty similar to that of any other mortgage and far less than it would be to break a mortgage from one of the Banks. In spite of the long term, penalties are based on a maximum of 5 years and would be the greater of three months interest and the interest rate differential. In a rising market, there would be no IRD.

If you have any interest in being one of the first, call me right away. 866-435-3748; info@koramgtcom

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