Keeping an Eye on the Price of Your Next Home? How about Your Interest Rate?

In the Calgary Real Estate market over the past year we've seen home prices drop significantly to say the very least. It's been a fantastic time for those ready to buy. Still waiting for the price to Drop on that home you've had your eye on?

If you're paying a mortgage over 25 years, how much of a difference does the price you pay make to your over all cost? The chart below shows how the difference in price affects both your monthly payment, and the amount of interest you might pay in 25 years if the interest rate remained the same for the entire duration of the loan.

It's important to note the importance of the mortgage interest rate in the equation. As a result of the world wide financial crisis, we've seen interest rates hit historical lows. Again, low prices combined with low interest rates are the perfect combination for buyers that are ready to make their move. Just this week in Canada however, some lenders have already started to increase rates on their five year fixed rate mortgages.

Because rates are expressed in portions of a single digit number (for now anyway), it's easy to overlook how much that tiny little number can cost you. The chart below shows how much a mortgage rate increase of just 1% could cost you over the duration of a 25 year mortgage.

Have you had your eye on Your Next Home? Price holding you back? Remember Low Prices and Low Interest Rates don't often come around at the same time.