Fixed or VRM?
- Thread starter tnguyen
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- Aug 31, 2007
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What are your plans for the property? How long are you going to keep it? Are you looking to increase your regular payment? Do you have the financial ability to make lump sum payments? Do you want or need a line of credit component with the mortgage? Interest rate is only one consideration when trying to decide on a mortgage. Can you give us a little more information as to your priorities?
As for the fixed vs variable question, these days I'd suggest fixed. With fixed rates so low and the lack of any significant rate discount on variables it doesn't really make sense to take on future rate risk by going with a variable, unless you're selling soon and not planning on porting the mortgage to a new property.
As for the fixed vs variable question, these days I'd suggest fixed. With fixed rates so low and the lack of any significant rate discount on variables it doesn't really make sense to take on future rate risk by going with a variable, unless you're selling soon and not planning on porting the mortgage to a new property.
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[quote user=tnguyen]Bank offers: Fixed 3yrs 2.99% or 4/5 yrs 3.19% or VRM 5yrs closed as 3%. I am thinking to go with the 4yrs fixed. Welcome to all other opinions.
Don't major in minors.
Pick a rate .. 0.2% is a very small difference. On a $250,000 property with a $200,000 mortgage that is $400/year or $33/month. A rounding error, really, like a poor paint job or a 10 day vacancy.
In a primary residence with a 5+ year view go with a fixed rate only if cheap, as today. Variable has to be 0.5-1% cheaper than fixed to go variable due to possible upside risk.
Don't major in minors.
Pick a rate .. 0.2% is a very small difference. On a $250,000 property with a $200,000 mortgage that is $400/year or $33/month. A rounding error, really, like a poor paint job or a 10 day vacancy.
In a primary residence with a 5+ year view go with a fixed rate only if cheap, as today. Variable has to be 0.5-1% cheaper than fixed to go variable due to possible upside risk.
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One idea...if a HELOC would be of use to you in the future, renewing the mortgage into a mortgage/HELOC combo with an advanceable option before the new OSFI guidelines come into effect could be useful.
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Hi Tommy,
There are lenders now that are offering less than 3% for 5 year terms. Available for primary residents only, and some other restrictions do apply.
Give me a call and I'd be happy to look at some options for you.
My personal opinion, if you can get the same rate for variable or fixed, go with the fixed. But plan ahead to avoid payment shock at the end of the next term. Rates will go up, it's just a matter of when. During a call, I can demonstrate your potential savings through managing your mortgage effectively.
There are lenders now that are offering less than 3% for 5 year terms. Available for primary residents only, and some other restrictions do apply.
Give me a call and I'd be happy to look at some options for you.
My personal opinion, if you can get the same rate for variable or fixed, go with the fixed. But plan ahead to avoid payment shock at the end of the next term. Rates will go up, it's just a matter of when. During a call, I can demonstrate your potential savings through managing your mortgage effectively.