Fixed Rate or Variable Rate Mortgages

[zimnicki]

Hey guys and gals

Just wondering if your mortgage is on a fixed rate or variable, on your rental properties? Right now i have 6.85% on a fixed rate for 5 years with td canada and that was with some cash back. Looking at getting a 2nd rental property (maybe deplux), and wondering if i should go with the variable rate, through a mortgage broker.


Thanks

Michael

 

[invst4profit]

You will do better with a variable rate, in my opinion, but there is always the pillow factor. You have to be confident enough with your decision to be able to sleep at night.

Unfortunately, or fortunately depending at how you look at it, my last purchase was only possible with the seller providing a VTB at 7.25% so I am in the position of paying it down each year with other variable rate loans. Mostly my HELOC.

 

[TerryF]

You might find this post from Peter Kinch`s office helpful:From November 18, 2008We have been recommending VRM`s to our clients for almost 2 years now. Currently, VRM`s are a very good option, but you should pay really close attention to the level of the fixed rates in about 6 to 12 months from now, and be prepared to consider locking in. We are already seeing some very interesting competion in the 12 month fixed terms, currently priced cheaper than the VRM`s. This means the banks are encouraging clients to be locking in and coming up for renewal in a year`s time.

If you read between the lines, the banks are somewhat `showing their cards`.

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Rob Macdonald
General Manager

PETERKINCH
CANADIAN MORTGAGE TEAM
204-2502 ST JOHN`S STREET, PORT MOODY BC V3H 2B4
T: 604-939-8326
F: 604-939-8306
TF: 1-866-988-8326
www.peterkinch.comhttp://http://www.peterkinch.comhttp://http://www.peterkinch.com

 

[zimnicki]

thanks for the help guys

 

[RobMacdonald]

There is another great product that has just come to the market. It is a Convertible one year term at 4.79%, that allows an early renewal without penatly to a longer fixed rate term, or a VRM. Allowing a renewal to a VRM is very rare.

The nice thing about this product is that you get a decent rate, better than most VRM`s today, but you can then sit and watch the pricing on the VRM`s over the next 12 months. We expect to see Prime + 1% to be adjusted. We`ve already seen 2 lenders move to Prime +.6%.