08 November 2011
Fixed vs. variable rate mortgages. What is better for you in Canada?
Variable Rate Mortgage
If you have a bit of understanding in how our banking system works, variable rate is the best and has been statistically for the past 15 years. If you understand that prime now has to go up 2% for you to loose money. With our economy the way it is, do you think the bank of Canada will rise interest rates 2% 9 the next few years – no, I agree., Too much debt and not enough employment will keep rates low.
Fixed Rate Mortgage
Fixed rate, which definitely allow you budget better,although you will be paying a higer interest rate.
Fixed and Variable Rate Mortgage
Another product to consider is the blended mortgage. This product eliminates the largest concern facing borrowers today. It is a mortgage that is ½ fixed rate and ½ variable rate. Clients get the flexibility of the two products working independently. This way a consumer can make larger payments on the fixed portion of the mortgage with the higher interest rate or increase payments on the variable side to reduce payments. Either way, it certainly does balance the lending portfolio and minimizes the future interest rate risk.
If you are not in a set budget, variable rate is a wise choice. If you are on a tight budget fixed may be better. All you rally need is either a good independent mortgage broker – accredit mortgage professional AMP who keeps you up to date of the changes of rates.
