Variable, or fixed?

[QuasarCav]

I see that fear is alive and well in this thread. The banks will be happy to know that.

+1 for variable

[Sorath]

3.84 is nothing, go variable. i signed at .9below prime, working out so far

[msommers]

Likely next year when I graduate I'll be looking to get into a place, probably a condo as that is all I'll get approved for.

For a fresh grad just starting a new job, would going variable still be wise? Reason I ask is because my mother and I sat down and talk about mortgages last night and she was REALLY against variable when you're first starting out. But that is a considerably lower rate that what we were using on the RBC site at 4.59% for fixed.

I'm not entirely sure how it works so correct me if I'm wrong. But hypothetically lets say:

I have 1000/month dollars to spend towards a new condo. My variable payment ends up being 700 but I choose to put down a 1000 each money. Even if the interest rate goes up, it would be less each month towards the principle. The only issue I would see is that if it went past 1000 to something like 1500. Is that how it usually works? Sorry for the highjack.

[kaput]

.

[AE92_TreunoSC]

I just took 4.5% @ 5 years. I like security, and not worrying.

[bimmere92]

so what are your thoughts on variable or fixed now?

.25% increase this week with another increase rumored...

[WrongWheelDrive]

Originally posted by Pacman
I'm in the exact same situation as you right now, but my 5 year fixed rate is 4%. I'm probably going to just lock in at the 5 year fixed rate as I tend to be risk adverse when it comes to mortgages. To me, the current fixed rates are very reasonable

That's exactly what I just locked in at. 4% fixed over 5 years. It's only going to go up from here, and I just felt it to be much easier and "stress free" so to speak.

It's up to you though. Like everyone has been doing already, just crunch some numbers in your scenario and see where you stand from present to the 5 year mark.

Good luck it's definitely a good time to buy.

[DRKM]

It is far to early to assume that credit rates will increase exponentially over night. Japan has been running 0.25% for years now.

Inflation is not the only consequence of massive stimulus. Deflation is a serious concern as well.

[WrongWheelDrive]

Oh totally true, if you don't mind the risk at all than by all means. It's just one of those "you never know" type of things IMO.

I just like the stability I suppose, and I mean 4%, to me, was low. So I just went with it after A LOT of thought, so I know what the OP is going through haha.

[HuMz]

I take possession on my first house in just under a month and decided to lock in at 3.84% over 5 years.

Varible was tempting but I knew it would go up and given im going to be pretty cash strapped to start out I didn't want to have to worry about the rates jumping above 4% in the next few years. (which it very well could)

[canadian_hustla]

Originally posted by Pacman
What about doing 1/2 your mortgage on the variable and the other half at the 5 year fixed?

I'm in the exact same situation as you right now, but my 5 year fixed rate is 4%. I'm probably going to just lock in at the 5 year fixed rate as I tend to be risk adverse when it comes to mortgages. To me, the current fixed rates are very reasonable

i am surprised that no one commented on this option as it is clearly the best of both worlds. Heck, I locked in at 5 year 3.39% but if I could do it over again I would do 1/2 fixed 1/2 variable

[A790]

Originally posted by msommers
Likely next year when I graduate I'll be looking to get into a place, probably a condo as that is all I'll get approved for.

For a fresh grad just starting a new job, would going variable still be wise? Reason I ask is because my mother and I sat down and talk about mortgages last night and she was REALLY against variable when you're first starting out. But that is a considerably lower rate that what we were using on the RBC site at 4.59% for fixed.

I'm not entirely sure how it works so correct me if I'm wrong. But hypothetically lets say:

I have 1000/month dollars to spend towards a new condo. My variable payment ends up being 700 but I choose to put down a 1000 each money. Even if the interest rate goes up, it would be less each month towards the principle. The only issue I would see is that if it went past 1000 to something like 1500. Is that how it usually works? Sorry for the highjack.

Your mortgage payment is never your real payment. If you buy a condo, you have to factor in condo fees, as well as property tax, etc.

For example: at 3.84%, my mortgage is $1,080/mo. Then there's $225 for condo fees, and $125 for property tax, as well as $38 insurance. For a variable mortgage, from what I've heard it's best to make payments as if you're paying the fixed rate payment. You'll wind up paying the principle down faster.

[Redlyne_mr2]

Peace of mind is worth a lot to me, fixed is where it's at.

[JordanAndrew]

Originally posted by canadian_hustla


i am surprised that no one commented on this option as it is clearly the best of both worlds. Heck, I locked in at 5 year 3.39% but if I could do it over again I would do 1/2 fixed 1/2 variable

Originally posted by JordanAndrew
Rates are coming up and more than likely will keep going up slowly, so like what Benyl mentioned, it depends what your risk tolerance is like. Have you ever tried talking to a broker about a mix of fixed/variable rate? It might be something you want to check out.

If you're buying a condo and you want to put an offer to it, just pay the down payment with conditions that you get your papers all worked out. If it's brand new I think you also have 10 days so you still have some time to shop around for the best mortgage for you.

It was the third post in the thread as an option.

[lint]

if you want piece of mind, get a mortgage that you can afford at 8%

[autosm]

For the first time I am going variable. The BOC/ FED cannot let the prime rate go above 6% in Canada or the US. If so, no one will be able to afford a 1600$ + per month interest only on a 350k starter house.

If it happens you will be able to buy homes for less than 1/2 of todays price's.

We are addicted to cheap money our economy will implode if rates get even close to 3% (Prime).

[kaput]

.

[ExtraSlow]

Prime absolutely will go over 3% and 6% too. Take a look at historical rates, and you'll see that 3-6% is on the low side of average.

[B20EF]

Originally posted by ExtraSlow
Prime absolutely will go over 3% and 6% too. Take a look at historical rates, and you'll see that 3-6% is on the low side of average.

Prime hasnt been above 6% in 15 years. Maybe that means its due or maybe it will be another 15 years before it goes up there again.

I like variable. I was even thinking about an interest only mortgage and bet the savings in stocks.

[kaput]

.