Author Topic: Canadian Mortgage question  (Read 1630 times)

going2ER

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Canadian Mortgage question
« on: October 02, 2015, 08:37:03 AM »
We have a bid in on our neighbours property, but it is an estate sale so we won't hear back until Tuesday. We have always gotten a fixed rate mortgage on our own homes so I am aware of how they work, but we are considering going variable rate for this property. Does anyone have any experience with variable rate mortgages? Do you really save that much in interest? or are interest rates on mortgages low enough that there isn't much difference? Just looking on a website quickly todays rates for a 5 year term are 2.70 for variable and 4.44 for fixed.

Maybe Later

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Re: Canadian Mortgage question
« Reply #1 on: October 04, 2015, 07:46:44 AM »
Those are posted rates.  You may be able to do much better than that.  Try www.ratespy.com for comparisons that can be filtered by province.

Fixed vs. variable will depend on your level of comfort with changing rates, but in Canada variable rate mortgages typically have much lower penalties to break than fixed, so consider that aspect as well.  A "standard" variable rate penalty might be 3 months interest at the bank's prime compared to the interest rate differential or pre-specified penalties in a fixed rate.

dess1313

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Re: Canadian Mortgage question
« Reply #2 on: October 08, 2015, 07:16:37 PM »
Those fixed rates seem super high!!!  need to shop around more.

http://www.firstnational.ca/Residential/Mortgage-Rates/
5yr fixed is only 2.64%

I had my mortgage through them and had a good experience.  I signed up for fixed, but i took only a 2 year contract last time since i didn't know what the rates would do and i wanted it to not be lasting forever again.  The best bet for most variable mortgages are when rates are dropping since you get the drop as soon as it happens.  They're so low now i don't know if they can go any lower.  Its more likely over the next 5 years we see some increases even if they're small.

Joan-eh?

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Re: Canadian Mortgage question
« Reply #3 on: October 08, 2015, 07:24:10 PM »
My personal experience has been that variabLe wins. Maybe it was because of the timing of my home ownership?  but they aren't locked in for 20 years, only 1-5, so I found that My variable was always better than fixed. I had fixed once, in my last year of having a mortgage,  it was the cheaper option.

Goldielocks

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Re: Canadian Mortgage question
« Reply #4 on: October 08, 2015, 09:16:17 PM »
Those are posted rates.  You may be able to do much better than that.  Try www.ratespy.com for comparisons that can be filtered by province.

Fixed vs. variable will depend on your level of comfort with changing rates, but in Canada variable rate mortgages typically have much lower penalties to break than fixed, so consider that aspect as well.  A "standard" variable rate penalty might be 3 months interest at the bank's prime compared to the interest rate differential or pre-specified penalties in a fixed rate.
  +1

It is 3x monthly interest to break a Variable, usually, and up to 3x that to break a fixed.

Plus the rate difference almost always remains in your favour.  If the total mortgage is low then the absolute dollars may not matter as much, but then Your risk in dollars is low, too.