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Don't you have to renew it every 5 years?
In USA, refinance happens only when consumer wants to. Usually to get a better rate or cash in on some equity I think.
In Canada, the mortgage has to be renewed every 5 years or less depending on your contract. They'll never let you have a 30 years mortgage on a 2% interest rate the whole time.
We have to renew in Oct and we were looking at BMO and they have a 10 year fixed now.
So what happens if you go to renew and they’re like “screw you, 8%”, and you can’t afford that increase? Do they just foreclose your house?
Well if you can't afford it, you take a temporary mortgage with the objective to sell.
Otherwise you add a lump sum to reimburse the capital to reduce your payments.
Different banks will offer different rates as well so you can shop around and negotiate.
Nope :)
I think you may be thinking of an ARM (adjustable rate mortgage) where the bank recalculates the interest rate every few years based on the current federal rate (I'm not a money-ologist, but I think that's the broad strokes of it).
I pay 2.1% APR until it's paid off or I choose to refinance again (lol, right). The only thing that changes my monthly payment are the stuff paid from escrow (property taxes and homeowners insurance) since those can vary and the bank takes care of those by folding them into my payment amount.
Nope, US has 15 and 30 year fixed rates available. You can get an arm that has a variable rate, but they've been un popular after 2008, and with the low interest rates not worth it.
i would have killed for that. got a 1.8% 20 year morgatge in 2021, would have loved to lock in at that.
Holy shit. We don't have that in Canada. I wish we did. A lot of people have lost their homes due to raising interest rates as they have to renew every 5 years or so. Real estate in Canada is so fucked up.
Wow! I did not know that! You essentially refinance your home every 5 years? How does that work? With new closing costs and everything?
Not who you were talking to, but no, the closing costs are one time only. You basically just renew or get a new mortgage somewhere else. Ours is coming up in October, we’re a bit worried but hopeful it won’t be too bad. We’ve got wiggle room as we got a great deal on our house but it’s still going to suck. I have seen a 10 year fixed, might go for that if we can get a good enough rate.
What a scam. Forcing you into new higher interest rates.
The US is unique in the 30 year fixed rate. It’s great if you have one, but it can have some externalities and effects like what we see here.
I haven’t heard of having to renew mortgage interest rates. A fixed interest rate should be good for the life of the loan.
I’m at 2.875% on a 25-year loan. I never plan on moving.
15 and 30 year fixed mortgages is pretty unique to the US.
Depends on where you live. Odds are most people reading this are in the US or Canada where fixed interest rates for life of the loan is common, though you can get an ARM. However in many other countries you cannot get those loans, and those people have to renew every few years.
Not Canada. Highest I’ve seen is 10 year, most of the time it’s 5.
I stand corrected.
I wish we had a 30 year! That would be amazing in some ways. I have to renew this year and I’m not looking forward to it.
That’s not a thing in the US like it is in Canada. I can keep my sub 3% mortgage for the 25 years I have left on it.
There are Adjustable Rate Mortgages in the US too. My sister-in-law lost her house a while back where her rate went up. I think they lock you in at a low rate for the first 5 years and then they go up. It sounds like a good idea if you're confident that rates are going to stay low and your home will increase in value making it easy to refinance. But in reality, no one can predict the market 5 years out, so I wouldn't recommend it.
Not sure what makes you think this, but most mortgages are a contract for 15 to 30 years that lock you into a rate until the house is paid off. You may be thinking of some kind of variable rate mortgage but I though those renewed the rates way more often than 5 years but I'm not sure. It'll all depend on the mortgage terms.
https://www.investopedia.com/why-high-mortgage-rates-matter-less-in-the-u-s-than-in-other-countries-8384678
All the non-Americans here can't get 30 year fixed mortgages, that's why a good part of the Lemmings here are confused
30 year fixed rate with a 30 year pay-back period is available in the Netherlands too, but most people take the 20 year fixed rate for a 30 year repay period, because it's lower interest, and after 20 years, the remaining principal is pretty low.
No who told you that? If your interest is fixed you don't fuck with that
Canada. Different rules here. I thought it was the same all across the world.
In the UK it's quite unusual to have a fixed rate mortgage that goes that long. Normally you'd get a decent rate for 2-5 years, at which point the rate changes to whatever the current default is, and you get the opportunity to fix for another few years
Somehow I think that would be great for un-fucking our "home investment" slave system in the US where landlords buy all these homes on credit, convert them to multifamily, and then use the labor of renters indefinitely while allowing the homes to get worse and worse.
It would solve that one problem, but would create so many more and much larger problems.
Of course, anything in a bubble without considering how to mitigate effects is going to be a problem. If it was just a single change necessary it would have already been done.
Well mine isn't it fix 30 years. You can get one of those our a floating rate but goddamm I was told to only get a fixed 30 year mortgage. Correct that most people do refinance in 5 years but in today's market no fucking way.