Quote:

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Originally posted by mrpandya

Hi
My mortgage term with current company is finished on 30 sep.
For renewal, which is best option right now variable or fix??
any good company gives good deal??
Any help or advise in this matter?
Thanks
mac

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I don't want to get humourous, but it might sound like one.

Say, you want to sell this year, then an open mortgage for one year.
If you are selling it before two years, then, once again, open mortgage, but for two years.
So, go for the next....

If you are staying there for ever, and want to renew it for the next, five or seven, ten years, then, go for fixed mortgage for five, or seven or ten years. But ask for their advice and the reason, why?

What I hear is, the rates might stay where they are or even go down in September 2015. But the Banks are not passing them on to us but taking away 0.10 and giving the user only 0.15, when the rate drops down 0.25%. What is it going to be for the next drop? Will it be the same or we get the full benefit of the drop. That is a very good question. You can bet it will be the same as they have done it to us twice already.

Try True North or the Meridian and also search for the CD group postings from the past and try their website too. I also came across a desi, in TMD, looks like there are tons of them now. All of them are good. But get the rates from them before you decide. Go for the lowest quote.

When it comes to money, NO ADVICE. You will have to take the responsibility and make the call. 99% of the time it will be O.K. So, go for the lowest rate, and fixed mortgage for the next Five years. If you are going for the variable, then you will have to face the risk all by yourself. Be a man.! Do the right thing.


FH.

Quote:

---

Originally posted by mrpandya

Hi
My mortgage term with current company is finished on 30 sep.
For renewal, which is best option right now variable or fix??
any good company gives good deal??
Any help or advise in this matter?
Thanks
mac

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Hi Mac,

Variable or Fix is the eternal question that no body can answer correctly. You have to answer it yourselves as choosing any one over the other would be dependent on a number of variables, some of which are as under;

1. Your risk tolerance. ----- Though historically people who have chosen variable rate over fixed rate and persisted with the same have come out ahead in terms of interest savings for over 80% of time. However, variable rate and possible fluctuations in the mortgage payment over the term of the mortgage may not be suitable for the people who would panic easily and run to convert their mortgage to fix rate with any increase in prime rate and later come to know that this may not have been the right decision. So, if you want to have a piece of mind for 3 or more years, then go for fixed rate mortgage as the fixed rates are historically low right now, but if you are a bit adventurous type and can ride the uncertainty, then go for a variable rate mortgage. There was an article today in the Globe and Mail which makes a good reading. The link for the same has been posted by lemon925 and I would advise you to read through the same.

2. Your time frame. ------ How long do you want to commit for the mortgage term?. Is it going to be 3 years or 5 years or more? Are you going to be moving elsewhere in near future?. Or are you planning to sell the existing house and upgrade? Or, would you be looking for a change in job etc. If that's the case, then having a good discussion with a mortgage professional may be your best bet as he/she would advise you after taking in to consideration of your circumstances now and any likely change in near future. Though generally in Canada you would choose a maximum of 5 year fixed term while for variable you can go for either a 3 year term or a 5 year term, though most of the lenders offer only 5 year variable. The reason for asking about the time frame is that should you decide to break the mortgage before the completion of term, then the penalties in fixed rate mortgage may be much more than in comparison to a variable rate mortgage. And if your fixed rate mortgage is through a bank, then you may end up paying an exorbitant penalty. So, if there is a chance of not completing the full term, then either go for a variable rate or if choosing a fixed rate then DO NOT go with a bank but go through a Mono line Lender using services of a Mortgage professional.

3. Mortgage Amount. ---- It also depends on your mortgage amount remaining. If it is not too much, then you can go for variable as we do not see prime rate going for a steep hike in couple of years, though NO ONE, not even Bank of Canada Governor would say that with guarantee.

There are other factors as well to consider and it would be advisable for you to discuss your options with your existing lender first but just do not take their word as gospel, but also talk to independent mortgage professional to get an idea of the best option for you.

Good Luck.