Should I go variable or fixed?

First questions clients always ask is “What’s the best rate?” and it’s closely followed by “Should I go variable or fixed?”

My answer is a variation of the following:

“If you can get up in the morning and you are both worried about your mortgage interest rate, then variable will suit you well. If you can’t go to sleep cause you can’t stop thinking about your mortgage interest rate, then fixed is best for you” Now there is more to it than that, however you have to stay true to who you are as an investor….yes your home is an investment; the largest one most of us will ever make.

Predictions are unpredictable, however if we are to listen to them, the con-sense is that by the end of the year we should see four rate hikes. There are two important things that I fell everyone neglects when they are looking at the possible interest rate hikes.

#1 Your term is 5 years, so you have to think past this years possible hikes. You need to be sure that you can weather a storm of rate hikes should that happen.

#2 You can lock in your variable mortgage at any time. However it’s important to note that you will not lock in at the 5 year variable rate, you will lock in to a term equivalent to the amount of time left in your term.

The numbers don’t lie, this year, we have seen a 175% increase in borrowers choosing variable rate mortgages in the last few years and this year is no exception. Most lenders are still offering prime minus 1% on 5 year variable mortgages. In fact, we have seen clients break out of their current variable mortgagee in exchange for a small penalty and a new much lower 5 year variable.

It’s important that before you make a move of any kind you speak to a mortgage professional.

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