The best options when it comes to selecting the right mortgage term will always be different, and can change several times throughout your term. The Angela Calla Mortgage Team will always keep you informed of your very best options in real time.
Historically, 88% of the time, the variable-rate mortgage (VRM) has helped borrowers get ahead significantly. But today may be part of the 12% of the time when fixed rates are the way to go. Here’s why:
- 1. Cost of Security – the payment difference on a $300,000 mortgage. The payment for VRM is $1,246 and fixed is $1,309. The difference of $63 a month is a low cost of security for 5 years to ensure your payment does not increase.
- 2. Risk of inflation – if you follow the Bank of Canada (BOC), it suggests that one or two rate hikes towards the end of this year would be suitable. If the BOC carried through on its suggestions, this would mean your VRM payment would be higher than the fixed rate you could get today.
- 3. Today’s low rates will be history – once rates rise, although you can lock in with most variables at no cost, you lock in at the fixed rates at that time, not the rate you could have gotten initially. Rates have nowhere to go but up.
When will a VRM be attractive again? Not until prime rises! When rates go up, generally the discounts also increase. The rule of thumb is the best time to consider a VRM is when you can secure a discount below prime at 0.40 or more. Some exceptions will always apply. The Angela Calla Mortgage Team is always here to help without bias as we are with you throughout the life of your mortgage.
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Angela Calla Mortgage Team