The 2 year fixed mortgage rate Canada is a perfect choice of term for those people who don't want to worry about the Canada mortgage rates year after year but need a more than average upfront interest savings. To get this mortgage rate, most lenders will require you to prove that you a payment plan is affordable to you based on a qualifying rate, usually higher poster such as 5 year fixed mortgage rate Canada.
Compare the Best 2 Year Fixed Mortgage Rates in Canada
2 year fixe mortgage rates Canada are suited to people who have good credit, reasonable debt load and an income that is stable and provable. Based on the qualifying rate which is a 5 year fixed rate benchmark as required by the Bank of Canada, all those borrowers who have an equity of 20% or lower must qualify for this term. Most of the lenders in Canada don't pay the legal and the appraisal fees when a borrower switches into a 2 year mortgage rate. By contrast, the lenders are required to pay the legal and the appraisal costs from at least 3 year mortgage term.
How Popular is 2 Year Fixed Mortgage Rates in Canada
Even though the interest rates of the fixed rate mortgages Canada are higher as compared to the variable rate mortgages, about 66% of the Canadian borrowers opt for the fixed rate term. For most of the households, the additional costs as in the case of the fixed rate offers an insurance against the rates that are rapidly rising, hence worth paying.
This therefore means that the popularity of the 2 year fixed rate Canada is not as bad, though the 5 year fixed rate Canada term is the most popular in the country.
Pros & Cons of a 2yr Fixed Mortgage Rate
People usually choose the 2 year fixed mortgage rate Canada terms for 3 good reasons:
The rate and the payment is usually lower compared to most of the other terms.
The choosers of the term expect a mortgage that is not longer than 2 years.
This rate gives them a flexible refinancing since one can renegotiate their mortgage sooner with no penalty.
The 2 year fixed mortgage rate also have a few disadvantages:
Renewal in a two year time means that one may have to incur the switching costs frequently if they change the lenders.
If the rates jump, one is not protected during renewal as is the case with the long fixed terms.
In declining interest rate surrounding, fixed rate even if for two years only, will cost more than variable rates.
2 Yr. Fixed Mortgage rate by Canada
The interest rates & the monthly payments remain the same for this type of mortgage term throughout all locations in the country. Borrowers start renegotiating the mortgage as the term nears the end. The interest rate on the 2 year fixed mortgage rate Canada is set according to the Canadian government yields of a 2 year bond. The borrowers pay an interest rate that is slightly higher than the 1 year fixed rate Canada, but the rates are secured twice as the latter's rate.