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!
[email protected]
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!
