So interest rates are on the rise, and the burning question for everyone with a variable rate mortgage and potential home buyers is: how high will they go? While we can do our best to forecast future rate increases, statistically variable rates often offer the best value for homeowners over the length of their mortgage. With that being said, for some homeowners, the peace of mind that comes with a fixed rate mortgage might be worth the risk of more interest paid in the long-run. If you’re a variable rate holder that “bit off more than you can chew” when it came to withstanding rate increases, you might be considering locking in at a fixed rate to make sure you can meet your monthly mortgage payments. When it comes to locking in your mortgage it can be confusing and stressful to navigate the fees and options you have, so let’s go through the process step-by-step. 

How to lock in your mortgage rate if you’re a new home buyer:

If you’ve been waiting on the sidelines, you’re still saving up, or you just haven’t found the right home yet, you might be worried about how rising interest rates will affect your purchase. Most mortgage lenders offer the option to lock in a mortgage rate for a certain period of time before closing as a part of your application. With Perch you can easily apply for a mortgage and get your rate locked in online. Rates usually can be locked in up to 120 days in advance and your dedicated mortgage advisor will be available by phone or email, seven days a week, in case you need support or have questions about the mortgage application process. With your rate locked in, you can rest easy knowing that future rate hikes won’t affect your monthly mortgage payments when it comes time to close on your home.

How to lock in your mortgage rate if you’re a homeowner:

If you’re a homeowner with an existing mortgage, the process is a little more complicated, so let’s go through it. To lock in your rate with a new lender, you’ll have to do a mortgage switch, which is different from a mortgage renewal. First of all you’ll want to secure your new mortgage with a lender. With Perch you can sign-up and get approved for a fixed or variable rate the same day. You can lock in the rate on your new mortgage for up to 120 days. It’s important to secure your new mortgage before the next steps, as breaking your mortgage before you’ve secured the new one can lead to disaster if you somehow don’t get approved. 

With your new mortgage rate locked in, the next step is to break your current mortgage. To do this you’ll work with your mortgage advisor to pay out your old lender and begin payments on the new mortgage. This will come with fees and penalties which you will need to pay to switch your mortgage. You can use our mortgage penalty calculator to estimate these costs, but it’s important to note that these are just estimates and the exact penalty will only be known once the discharge request is confirmed by your existing lender. Now that you’ve secured your new mortgage, and ended your old one, what’s next? Well, nothing! A common misconception that mortgage switches have is that they need to coordinate the discharge of their current mortgage. This will all be taken care of for you! The new lender issues a discharge request, the old lender confirms what is owed and then we pay it out on closing. Nothing else required from you.

So there you have it, all the info you need to lock in your mortgage rate, whether you’re a new home buyer, or an existing mortgage holder looking to switch to a fixed rate.