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is Now a Good Time for a Variable Rate Mortgage?
Posted on April 24, 2008 at 5:47 pm
Filed Under Financial Planning, Mortgage Planning
One of the most common questions we are asked when it comes to choosing a mortgage is “Should I go with a fixed rate or variable rate mortgage?”
With what he have seen over the last six months, and specifically on Tuesday of this week, a variable rate mortgage seems to continue to make more and more sense. I can say in my own personal experience that my mortgage payment has decreased by over $200 since November and prior to Tuesday’s Bank of Canada decision, and will drop yet again based on my choice to choose a variable mortgage. The question remains however, is it right for you?
Your Take-Away: Before you decide one way or the other as to which type of mortgage you will choose, it is important to explore more then just your cash flow needs today. It would be worth your time to seriously consider the following questions:
- If rates were to rise, would you instantly be in a “house poor” situation
- Are you comfortable with the volatility and unpredictability of the markets
- How do you invest your savings - in a more conservative or more agressive portfolio
- Have you decided approximately how long you plan on living in the home you are buying or refinancing
Although these questions won’t necessarily give you an exact answer in terms of what type of mortgage to choose, they will help you to explore some of the issues you may be forced to deal with if the current rates were to change abruptly. We believe that a variable rate mortgage can make a lot of sense for a lot of people, but by no means is it a one size fits all product.
Until next time, have a Terrific Tuesday.
Chris & Elisseos
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[…] is Now a Good Time for a Variable Rate Mortgage? One of the most common questions we are asked when it comes to choosing a mortgage is “Should I go with a fixed rate or variable rate mortgage?” With what he have seen over the last six months, and specifically on Tuesday of this week, a variable rate mortgage seems to continue to make more and more sense. I can say in my own personal experience that my mortgage payment has decreased by over $200 since November and prior to Tuesday’s Bank of Canada decision, and will drop yet again based on my […]