I read a comment on a post about high rent that said that, “[they probably] bought a $550,000 house with a built in basement suite to help cover [their] 2.1% mortgage 4 years ago and [they] just had to resign at 6.8%”.
Please what renewing or resigning means in this context. I’ve never bought a house and I barely know about mortgages from movies. TIA!
In: Economics
I presume they mean “re-signing”, rather than “resign-ing”.
When you take out a mortgage on a property you borrow money over a specific length of time, say 25 years. The interest you pay each month will be based on either a variable rate – based on the national interest rate, going up or down each month with that – or a fixed rate – based on a specific interest rate determined at the time you took out the mortgage. You will normally agree to your fixed rate for a specific length of time too, but shorter than your overall mortgage, usually 2-10 years. At the end of that time, you either go onto the standard rate (usually a lot), or get a new deal.
People who got fixed rates when interest rates were low are now getting to the end of those fixed rate terms and are moving onto more expensive rates because interest rates are much higher now.
This is how it works in the UK, but might be different in other countries.
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