Mortgage Rates

[DC328is]

Hey guys, I'm currently building a house and it wont be done until June, July.

I have already been quoted a 2.25% variable rate I think for 5 years. This is what I plan to go for.

Now I have a friend (pretty good friend) who works at ATB financial as a Mortgage Specialist, and says I should go with Fixed 3.89% for 5 years. But I think hes just trying to get commission off of me. (because banks make a lot more money off of fixed mortgage rates)

Do you think I should go with Fix or Variable?

I have done my homework and it appears that history shows that there is a approximately 0.5% increase every year. I bet that the variable rate should be the better deal, and I could potential save thousands of dollars. I know this is all speculation on how fast the economy would return back to normal.

I just want to hear your thoughts!!!

Thanks in advance!

[whiskas]

Can you handle the payments if the rates jump to 6%?

Don't try to predict future rates, the only logical assumption you can make is that rates will go up in the future.

[bg_27]

Yah given what has unfolded over the past 1.5 years and record low interest rates, I don't think your 0.5% increase will happen. Once rates go up I think they will go up faster than 0.5% per year.
Better to go with that fixed.

[canadian_hustla]

Originally posted by DC328is
Hey guys, I'm currently building a house and it wont be done until June, July.

I have already been quoted a 2.25% variable rate I think for 5 years. This is what I plan to go for.

Now I have a friend (pretty good friend) who works at ATB financial as a Mortgage Specialist, and says I should go with Fixed 3.89% for 5 years. But I think hes just trying to get commission off of me. (because banks make a lot more money off of fixed mortgage rates)

Do you think I should go with Fix or Variable?

I have done my homework and it appears that history shows that there is a approximately 0.5% increase every year. I bet that the variable rate should be the better deal, and I could potential save thousands of dollars. I know this is all speculation on how fast the economy would return back to normal.

I just want to hear your thoughts!!!

Thanks in advance!

you should do what i wish i did... split it
50% of the mortgage if variable @ 2.25%
the other 50% is fixed @ 3.89%
nothing saying you can't do that

[93mr2gt]

how does the split mortgage work?

[Mys73ri0]

Originally posted by DC328is

Now I have a friend (pretty good friend) who works at ATB financial as a Mortgage Specialist, and says I should go with Fixed 3.89% for 5 years. But I think hes just trying to get commission off of me. (because banks make a lot more money off of fixed mortgage rates)



Does your friend work at a branch 9-5 monday to friday or as a mortgage specialist/broker who goes around looking for business. If he works in a branch 9-5 M-F he doesn't make any more or less from you whether you get a fixed or variable mortgage. If you're basing any of your decision on that what you think your banker is trying to 'sell' you, you might need to take that out of the equation.

[civicHB]

Originally posted by 93mr2gt
how does the split mortgage work?

the 50-50 split mortgage works like this;

Half your mortgage amount is charged interest based on the current variable rate.
The other half of your mortgage is charged interest based on the fixed rate you signed up for.

So if you have a $200,000 mortgage then $100,000 would be under the variable rate and $100,000 would be under the fixed rate.
If rates go up only the portion under the variable rate is affected and you will have to make up for it with higher payments.
One neat feature is you can pay off whichever portion benefits you. If your fixed rate is higher then you can make the extra payments to that portion and vice versa.

pm me if you need more clarrification

Bemnet

[civicHB]

Originally posted by DC328is


I have already been quoted a 2.25% variable rate I think for 5 years. This is what I plan to go for.

Now I have a friend (pretty good friend) who works at ATB financial as a Mortgage Specialist, and says I should go with Fixed 3.89% for 5 years.
Thanks in advance!

There are definitely slightly better rates out there and you should do some more research.

5 yr 3.69% should be easily attainable.

Bemnet

[tirebob]

I was going to be getting prime minus .2 (2.05%) on my variable, but Scotia just called back to inform me that even though I have already signed for that rate, they were now giving me prime minus .3, so now I am getting my variable at 1.95%. I must admit I was slightly shocked considering I just had signed all the mortgage papers 2 days earlier. Nice little bonus!

[mr2mike]

Wow, good to hear tirebob. So it's worth noting to ask about rates again when you're going to sign papers.

Is there something against getting them to get another quote before you sign papers and take the better of the two? Credit rating drop or you then lose your first quote?

Just asking for future reference or for others.
Thanks

[tirebob]

Originally posted by mr2mike
Wow, good to hear tirebob. So it's worth noting to ask about rates again when you're going to sign papers.

Is there something against getting them to get another quote before you sign papers and take the better of the two? Credit rating drop or you then lose your first quote?

Just asking for future reference or for others.
Thanks

Well I am not sure exactly how it all came to be, but the short story is I had gone in to sign all the final papers at the bank, was walked though everything, buddy shook my hand and said congrats, call your lawyers and tell him the funds are secured, etc...

Next day I get a call from my broker telling me the bank has decided I need to resubmit some more proof of income numbers etc to finalise everything. I was like "wtf??? The bank already said everything is good and had me come in to sign everything... I take posession next week!" So my broker says that he will talk to them... Next day he calls me up and says everything is now good and "oh... BTW... I got you an extra point of your mortgage rate!" I don't know for sure if is because he beat them up more for the hassles or they had a rate drop since the initial quote was done or what, but I am glad my broker was working for me...

Thanks Paulman Cheuk!!! (shameless plug for my broker!)

[03ozwhip]

im in the same exact boat. june, july is my possession date and 3.89 was initally the quote but it has gone down significantly too. im seeing 2.15 FIXED 5 years on signs from banks....i should be talking with my bank in the next couple days to see whats up with that....

[yellowsnow]

2.15 fixed 5 years?? i doubt it's fixed. probably variable.

[tirebob]

Originally posted by yellowsnow
2.15 fixed 5 years?? i doubt it's fixed. probably variable.

Yeah I think that is variable too... It was posted 2.25 and with the extra .1 that seem to be available, 2.15 posted makes sense. You can usually work a discount off the posted as well with good credit rating. Like I said, mine was 2.25 minus .3...

[freshprince1]

I ended up going variable 2 years ago. I'm on Prime minus 0.6%. Right after I signed, rates hit the floor, my payments went now almost $600 per month. We've left the payments at the original amount and have been getting that extra principle paid off every month. It's been very nice to pay offan extra $7000 of principle per year. But I have been thinking of getting into a fixed rate. Since my bank will let me slide into a 5 year fixed with no extra charges, and since rates might be going up...to get ~3.8% guaranteed for the next 5 years is still an incredible deal.

Bottom line, you have to be able to stomach the risk of a variable rate mortgage. I'll admit, I worry about rates going up. But it has worked well so far. In the end, there is no shame in signing in fixed below 4% for 5 years. Historically, it's still a tremendous rate to have.