Mortgage coming due

[Jabba 18389]

So, my mortgage is coming up for renewal next year & I'm kind of wondering what I should do.

 

Right now, I've got a variable rate @ 0.8% over consumer prime. I'm paying 3.8%.

 

I've been getting some calls from my mortgage company & they just want to check to make sure everything is good & that I was a happy guy. They also offered me some interesting rates for a closed mortgage:

 

4yr 2.89

3yr 2.79

2yr 2.49

 

So, what opinions are out there? Should I go for a closed or variable open?

[Guest N***he**Ont**y]

Closed for the longer term but with the econemy being in the tank still variable might be good for the next two years. Go with the variable for two years. You can always renegoitate if the interest rates are going up!

[igab 5629]

I am signing 2.99 for 5yrs fixed next week.

The trick is to get yourself a mortgage broker. They will find the best deal for you. Approaching your current lender in my experience doesn't work. I did that a few years ago and he assured me that he was giving best deal. I got it a percentage less through a broker with another lender.

[Luckyme 41401]

If I were you, I'd go for the 4yr term at 2.89%. I am no expert in mortgage or financial matter, but the long term of 4 years at an attractive rate of 2.89 provides good stability, IMHO. In addition, the prime may not go lower than it is now. Again, this is my personal opinion and I am a former owner of many mortgages including residential and commercial.

[baileydog 9367]

lucky me, I don't have a mortgage any more (of course, that also means I'm getting old - lol)

 

looking back, every time I went fixed rate, I got burnt ... every study shows that variable is the way to go

 

but ... we are at an interesting point "economically" ... at some point interest rates will have to start going up again ... but there is so much bad economic news that I think there will be another year or two or more before rates rise

 

on the other hand ... there is something to be said for certainty and with rates so low locking in on payment you can afford means one less thing you need to worry about

[PistolPete 61421]

I agree with the above comment (Igab) about using a broker. Well worth the effort to look into,the broker will get you the best deal going right now.

For your own interest check out the following link, best of luck what ever you decide.

http://www.ratehub.ca

[Capital Hunter 18263]

Mine will be up next year too (second half of next year) and I will go for 5 year fix at 2.99% (hopefully it will stay that low).

 

Predictions are that interest rates (mortgage rates) will start rising late next year (likely fall of 2013) as the economy gathers steam growing above the current weak grows rate of 1.5% to 1.8% expected until then. Also Canadian households are accumulating record debts and that by itself may trigger another tightening of the rules sooner than later or an earlier than expected rate rise. Housing sales/resales already weakend and housing prices stabilized as a result of last July's tightened rules. Best bet is that rates will remains this low for another 6 to 9 months at the most and beyond that it will rise but only slightly (but even 1% rise on average 300k mortgage is $3000 per year). So if your mortgage is due within this period, then going for 5 year fix is my advice.

[Guest b***y1**4]

Tough to argue locking in at these rates. I agree with all about getting a broker. Banks won't do you any favours.

 

What I think works very well is find out how much your monthly payments would be on your 4 or 5 year rate. Take that monthly (or bi-weekly) payment and take a variable mortgage (providing the rate on variable is good). Where you get into trouble on variable mortgages is if you pay the bare minimum and when rates rise your monthly payments increase. If you are comfortable with the 5 year mortgage dollar figure go with that and more money will go on principle.

 

@baileydog...totally right on that...history shows that variable is the way to go.

 

But as I said...tough to argue 4-5 years at below 3%. Whatever you do I'd accelerate payments if your budget allows

[silverado17 12689]

So, my mortgage is coming up for renewal next year & I'm kind of wondering what I should do.

 

Right now, I've got a variable rate @ 0.8% over consumer prime. I'm paying 3.8%.

 

I've been getting some calls from my mortgage company & they just want to check to make sure everything is good & that I was a happy guy. They also offered me some interesting rates for a closed mortgage:

 

4yr 2.89

3yr 2.79

2yr 2.49

 

So, what opinions are out there? Should I go for a closed or variable open?

 

i've done it before tell them your going to move your mortgage and they will give you a better rate ... no harm in trying

[drlove 37204]

It's really a gamble... do you want the security of a fixed rate, or are you willing to take a risk? When I got mine a couple of years ago, everyone was advising me to lock in, and that seemed pretty good at the time; however - the rates didn't rise as expected. Looking back, I'm kicking myself for not going variable, as the bank was offering prime minus 0.4%

[Nicolette Vaughn 294340]

I would go fixed with the rates you've been quoted. I was locked in on a 5 year fixed rate on one my house and this was when rates were higher. After that, I went variable and got better rates.

 

It's hard to say what the rates will be in the future but if you're getting 2.89%, I'd lock that sucker in for 5 years. It's a great interest rate and you will have a piece of mind. Variable mortgage rates are great when the rates are higher and all the banks are competing to get your business with attractive rates.

 

How much lower can interest rates go without having to go back up? And if you want or need to get out of your mortgage, it's easier to do that with a variable one without the penalties you would incur on a fixed. And for the other poster who mentioned about doubling up on the payments on a fixed mortgage, that's a very good idea.

[Winnipegcub 21293]

I agree with the comments on getting a mortgage broker. As for fixed vs variable it really depends on your capacity to take bumps if they happen. I would stay play out variable for the next 48 months. However, if you want the security and peace of mind certainly nothing wrong with the current fixed rates either.