Everyone Still Choosing Variable?

Millions

Inspired Forum Member
Registered
I'm about to refinance but because I'd like to sell in the next year or so, I'll likely go variable for the easy cancellation policies, but with rates rising quick, I'm tempted for the first time to lock in.

Wondering everyone's thoughts? Variable still beats fixed even if they bump up .5 tomorrow, but who knows in the next year...
 

Thomas Beyer

Senior Forum Member
REIN Member
Assume variable rates are 1.25% higher by mid to late 2023. Variable rates of P-0.7-0.9% are common today.

I’d get that esp if you want to sell before mortgage expiry date.

Variable rates are always cheaper than fixed rates, on average.


Thomas Beyer, Asset Manager & Improver, Hard Asset Investor & DeFi Asset Hodler, Author, Father, Mentor, Hiker, Kayaker www.prestprop.com
 
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Millions

Inspired Forum Member
Registered
Yeah, it also seems like the banks keep lowering the spreads too. Scotia was offering prime - 0.85 a month ago. now prime - .7
 

Thomas Beyer

Senior Forum Member
REIN Member
Yeah, it also seems like the banks keep lowering the spreads too. Scotia was offering prime - 0.85 a month ago. now prime - .7

Still better than a fixed 4% for a 5 yr mortgage for at least 18 month AND smaller prepayment penalty if you exit early.


Thomas Beyer, Asset Manager & Improver, Hard Asset Investor & DeFi Asset Hodler, Author, Father, Mentor, Hiker, Kayaker www.prestprop.com
 

kmcintyre

New Forum Member
Registered
Hey Matt,

This is a little blurb I wrote a while back about this topic. Still very much team Variable. Especially if you're a real state investor!

Most consumers right now, if they were to lock in they would
Locking into a fixed rate now would cost you more.

Even if prime was to raise 2.5% over your term, most of you would be well ahead than if you locked into current 5 year fixed rates, especially if you take variable and set your payments like you are fixed. I have a wicked calculator that can predict your savings based on prime going up x% if you set your payments higher. It's awesome. Email me if you want it! Katherine@Villagemortgage.ca

Another, well overlooked point is at the end of day what matters is your TOTAL cost of borrowing. Variable rates are typically based on a 3 month interest penalty (make sure your lender doesn't do this based on prime), where fixed can be an IRD penalty. This allows for more flexibility long term as more than 2/3 Canadians will not fulfill a 5 year fixed mortgage.

How can you help better the position you are in:
- Set your payments like you are fixed (I can calculate this number for you, and you simply call your lender and ask your payments to be increased)
- Remember variable rate mortgages carry a significantly lower penalty than fixed in most cases. With increasing equity, and statistically speaking, almost 3/4 Canadians will break their mortgage early so this is a huge consideration.

And over the last 25 years, almost any 5 year point in time, Variable clients won over fixed.

Have a wonderful day Matt!
 
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