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  Canada Immigration Forum > About Canada > Real Estate & Mortgages > Mortgage : 5Y : 2.35F vs 2.10V
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Mortgage : 5Y : 2.35F vs 2.10V




Hi,

Please advise which is a better option :

Mortgage amount $1M

Period : 5 Years


a. 5 Years Fixed : 2.35 (HSBC)

b. 5 Years Variable : 2.10 (Meridian Credit Union)


Thanks

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Fido.

 
Fido

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Post ID: 234513 05-04-17 10:45:33
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lemon925
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Location: Toronto


Hi Fido,

Between these two, 2.35 fixed sounds better. When rate difference is more than .5 then people normally go with variable.



 
Post ID: 234523 05-04-17 15:45:23
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Fido
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Member since: Aug 06




Posts: 5266
Location: Canada


A colleague did a small calculation .

(2.35-2.10) or .25 *1M=$2500/-


With variable 2.10 option (worst case)

In case the prime rate stays same for 2 years : +$5000/-

In case it rises 25 basis points after 2 year : $0/-

In case it rises 25 basis points after 1 year : -2,500/-

Plus Variable generally has a more flexibility in case of a breakage in between.



Seeking more opinions please urgently as I have to decide very soon ...


Thanks.


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Fido.

 
Post ID: 234524 05-04-17 15:57:34
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Canada_Ka_Bhikari
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Member since: Mar 16




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Fixed 2.35 if job is steady and won't be breaking the Mtg.

otherwise 2.15 Variable if worried abt penalties and breaking MTg

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Post ID: 234525 05-04-17 16:24:46
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sudesingh
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If your VRM is a closed one then it will have penalties attached unless if it's a open VRM. Though with a closed VRM you should be able to convert to a fixed without penalties.


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SS
Reiki Grand Master

 
Post ID: 234528 05-04-17 21:27:41
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Canada_Ka_Bhikari
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Quote:
Originally posted by sudesingh

If your VRM is a closed one then it will have penalties attached unless if it's a open VRM. Though with a closed VRM you should be able to convert to a fixed without penalties.



VRM penalty is always almost just 3 months Interest penalty, which is much lower.

Fixed will be either 3 months Interest or IRD penalty, which ever is higher. 99 % of the time you will pay the IRD which will be very high.

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Post ID: 234532 06-04-17 00:50:21
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Blue_Peafowl
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Member since: Dec 08




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Location: Brampton, Ont, Canada


Go with Fix mortgage... The condition we are in right now Interest can only go UP.


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Post ID: 234535 06-04-17 09:18:27
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lemon925
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Member since: May 15




Posts: 202
Location: Toronto


Did you check for 2yr or 3yr fixed, if it is same or lesser than variable rate then I would prefer 2/3 yr fixed over variable.



 
Post ID: 234537 06-04-17 09:45:43
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Fido
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Member since: Aug 06




Posts: 5266
Location: Canada


Hi,

Thanks for all the responses ..Much appreciated .

Finally went ahead with HSBC 5YF after meeting both at their offices yesterday.

Meridian was gray about penalty and the agent was skirting an explanation till yesterday when they clarified that

a. The only condition in which you can break this VRM is when you sell the house and even then the fixed mortgage rate would be calculated for 3 month at the existing rate then...... This made me lose the flexibility of breaking the mortgage at will .... Plus the dealing person was overly aggressive .

b. HSBC is all set and good to go. Pleasure to deal with them.

c. I was trying for a 2YF of 2.19 with RBC but their person came back to me last week advising me that I did not qualify for a 2YF and only 5YF @ 2.69. However day before yesterday he called me inquiring my status and when I told him I had better options , he promoted $1500 cash back and the 2YF 2.19 rate ..... I felt lacking ethics and said NO.

Moral for next time , start early.

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Fido.

 
Post ID: 234556 07-04-17 11:43:19
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sudesingh
Senior Desi
Member since: Jul 04




Posts: 2062
Location: Toronto


Quote:
Originally posted by Fido

Moral for next time , start early.



:clap:

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SS
Reiki Grand Master

 
Post ID: 234557 07-04-17 12:49:09
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Contributors:
Blue_Peafowl(1)  Canada_Ka_Bhikari(2)  febpreet(1)  Fido(3)  lemon925(2)  sudesingh(2)  
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