It may go as high as 5.5%.

I doesn`t matter if you break 3 years later or 6 month before the term ends. You will pay the same mortgage penalty, 3 month mortgage interest or Interest Rate Deferential penalty.

A little clarification to mortgagepro`s comment. It is true that you will pay a penalty regardless of the months remaining but the penalty could be drastically different between a 3 year and 3 month remaining term. There are 2 calculations that the banks use for penalties. 3 months interest calculation and Interest Rate Differential IRD. If the conditions are right 3 months penalty for 3yr or 3month term should be close. If the conditions are such that an IRD will be used to calculate your penalty then you are looking at a huge difference in penalty. Talk to your bank and they will calculate the costs involved for you. My suggestion is to consider a port of your mortgage. A port is where you move the mortgage term rate and balance to the new property with no penalties. You can straight port it (no change in any mortgage particulars). You can port increase where you need more money (term remains the same, higher mortgage amount and the rate is blended with todays rate). Or do a port reduction (same term, same rate, smaller mortgage amount required for new house, some penalty may apply but much less than a complete break). One last thing I should mention. Once you bank gives you your options please contact a Mortgage Agent to do some further calculations for you. Many people have benefited from switching to a new bank for their new home. This is especially true today where rates are much lower than any mortgage started over 2 years ago. In the end what you end up doing with your mortgage must depend on how much money you will save going forward. That should be your #1 priority, mortgages are very expensive over time, you have to find ways to minimize your costs. I would be happy to consult with you if you have any questions. Abraham Niyazi - Mortgage Agent - Lic#M08010640 - Centum One FInancial Corp - Lic 10758. Cell: 416-993-4082 Toll Free: 1-866-728-3708 http://www.centum.ca/abraham_niyazi/ I deal with 25 Banks/Lenders and can do mortgages across Canada except Quebec.

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I am shopping around for a mortgage but i dont understand what happens when the initial 2 year fixed rate term expires. can you move the loan to another bank and get another fixed rate ?

When most people call something a fixed rate mortgage they mean a fixed rate fully amortized mortgage. What you must have is a mortgage that the rate was fixed for a period of time and then it either balloons (you have to pay off the balance with cash or by getting a new loan somewhere) or the interest rates adjusts. Either way you should find out what your loan will do. You should not get a loan that you don't understand. I would stick with fixed rate fully amortized loans- and I would stick with local loan officers that I can speak face to face with. A lot of very smart people have been conned by mortgage loan officers they only met over the internet. Even if it is a large well known company I would only deal with a local loan officer.

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I am finding it difficult to decide on either a 2 year fixed at 4.1% - or - 5 year fixed at 4.5%. the monthly difference being around £50 a month. is it even good time to fix? if so longer or shorter term. any ideas, advice....guidance would be much appreciated.

Tricky one, this. With interest rates quite low now, and poised to move higher in both the short and long term, I'd be looking to lock-in the rate for as long as possible. That may be the 5 year, or perhaps it could work that the 2 year, followed by a five year would work best... Do the math and make sure that even if interest rates climb to the 10% range, you'll be able to afford to stay where you are, because I'm betting that in 7-to-10 years, we'll be seeing 10%-to-15%, at least.

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I was checking the mortgage rates at a financial institution, and i found they offer a 1 year fixed for 2.8%, and 5 years fixed for 3.89% i heard from someone that i can renew my mortgage term, so if that's the case, why would someone go for the more expensive 5 years term if they can go with a 1 year term and renew annually? or am i missing something here? i hope someone can explain. thanks

if the 1 yr term expires, then you would need to refinance. depending on your financial situation you may not qualify to refiance to a better rate. Then you're left with an adjusting rate. plus each time you refinance your mortgage, you still need to pay the fees. you maybe saving on the monthly mortgage on the lower rate, but the fees you're paying may not add up to the savings. That's why so many people were messed up with the housing crash. People went for the lower rate, but when it's time to refinance, their debt to ratio was higher than their loan, therefore, banks would not let them refinance to a lower rate and the people are left with a very high rate and a very high monthly mortgage. If you are thinking of keeping your house for more than 5 years, I would say to go for the 5 yr fix rate. But if you for sure know you can sell or pay off your loan within 1 yr, then you go with the 1 yr fixed rate. Also, you have to make sure the mortgage you're paying is with interest and principle, and not just interest.

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My 2 year fixed rate expires march 2009 on my repayment mortgage,what should i now be doing in order to secure the best deal when i have to renew, in terms of the current economic climate?

I would concur with some of the earlier answers - speak to an adviser. Things are so upside down now, that it might not in fact be worth your while remortgaging in March, as some lenders bring their Standard Variable Rates so low, there is little point going to the expense and trouble of arranging a remortgage. An advisor will be able to give you a view of the whole market - and it may still be worth your while going for a remo anyway. I would tell you to keep track of your existing lender's SVR, and compare it to what deals your advisor can offer you from the market, and make your own choice from that information.

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Our fixed rate mortgage deal is coming to an end this month, and we can't decide how long to fix it for when we remortgage? 2 years at a rate of 3.19% or 5 years at a rate of 4.59%? at first we were sure we should go for the 5 year deal, and have the stability of a long fixed term, but now we're swaying more towards the 2 year, as it means our payments will be an extra £80 less a month, and then remortgage at the end of the 2 years? they both have a £399 arrangement fee, which we will be paying upfront rather than adding to the balance of the mortgage, and both deals are from the same mortgage company. we' re running out of time to decide, and just wondered if anyone could give us some useful advice/opinions?! we've only been on the property ladder for 2 years, so still a bit new to all this! thanks in advance

Try: http://www.moneysavingexpert.com/mortgages/fixed-discount-mortgage-guide It's impartial and user friendly, so hopefully will be pretty much what you need, even though there are no guarantees in the world of finance (well, OK, taxes are!).

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I bought my property for £124,500 and took out a 100% mortgage at a fixed rate for 2 years. the fixed term ends in may and it is with northern rock who have already advised they can't offer another mortgage because of the problems they have had this year. because of the crash in house prices my house is probably worth the same as what i bought it for, possibly less. what can i do when my fixed rate ends, im not planning on moving so can sit out the credit crunch but i am worried that i won't be able to remortgage.

Get yourself another job NOW and start putting the money by to put down on the house when you remortgage. Banks are looking for minimum risk now, if you can put down some extra cash it will help! Can the bank of Mum & Dad help? How secure is your main job? Are you earning enough to pay for an increased rate mortgage? Get yourself a well paid boyfriend - be nice to him - and he will want to move in and help you financially!

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Hi, i am planning my first mortgage. 1). with current market what is the best option for mortgage: a). variable (tracker) rate ? or b). fixed rate ? 2). what is the best initial term with each of above?. e.g : 2-year fix vs 4-yerar fix ?

Definitely fixed rate, 30 year term. If you can comfortably afford the slightly higher payments, go for the 15 year term. Variable rate mortgage (like interest only) is what got so many people now in foreclosure into trouble in the first place. At least with a fixed rate mortgage, you know that your payment will remain steady for years to come, with no big surprises.