Mortgage Rates in the U.S. and Canada

It is important that you take the time to look and shop for the best mortgage rate because you can save thousands of dollars in interest charges.

On a 25 year $100,000.00 fixed rate mortgage, a half percent drop in interest rate can save you $9,173.82 in interest charges over the life of the loan.

Interest rate can be fixed or variable. In the U.S. you can obtain a 15 year or 30 year fixed rate mortgage. In Canada you can only obtain a 1 year to 10 year fixed rate mortgage.

In the U.S. the interest rate on variable or adjustable rate mortgage is adjusted once a year. In Canada the interest rate is adjusted each time the "Prime Rate" changes. When there is a change in your interest rate, your monthly payment will be adjusted accordingly.

You will choose a fixed rate mortgage if:

-you want a stable monthly payment.
-you believe interest rate could rise in the next few years.
-you plan to stay in your home for many years.

You will choose a variable (or adjustable) rate mortgage if:

-you want lower initial monthly payment than a fixed rate mortgage usually offers.
-you think interest rates may fall in the next few years.
-you plan to own your home for only a few years.

In the U.S. interest expense is tax deductible irrespective of whether the property is for investment purpose or for self use. In Canada interest expense is tax deductible only if the property is for investment purpose; it is not tax deductible if the property is your primary residence.

In the U.S. all lenders must quote an APR rate (annual percentage rate) which make rate comparison easy and straight forward.

Interest rate on Canadian mortgages are usually compounded semi-annually. Beware though that some Canadian lenders may quote you a rate which is compounded monthly. Rate compounded monthly is slightly more expensive than rate compounded semi-annually.