<<< back to article list

Money, Money, Money

Blog by Patrick O'Donnell PREC* | October 11th, 2011

Is it time to switch from a variable to a fixed rate mortgage? 

With rates so low on fixed term mortgages these days, more and more Canadians are asking if it’s time to switch to a fixed term mortgage.

Deciding what to do depends on a number of factors, but a good place to start is a closer look at your goals. Working out what you can live with on a monthly basis for the next couple of years, might actually be a good thing. Especially as a first time home buyer. It is also important to remember that if you are paying 4% on a mortgage and only getting 2% on a GIC, pay off your mortgage. Having the comfort of living mortgage free is a huge weight of your shoulders.

If you’re trying to save money or lower your payment, a variable interest rate is usually one of the lowest mortgage rates offered. The downside is that in an increasing rate environment, your interest rate will rise as the Prime Rate rises —  possibly costing you more in the long run. 

If peace of mind is what you’re after, a fixed rate provides the security of knowing what the interest rate will be for the term of your mortgage.  

In addition, your goals or circumstances may have also changed over time. Perhaps you’re thinking about starting a family and want the predictability of knowing what your interest rate will be. Or maybe you’re finding it hard to sleep at night because you feel that interest rates are likely to rise. These are good indications that you might be a good candidate for switching. 

 In the end, choosing the right mortgage term is a personal decision. As is, choosing the right real estate agent when deciding to buy or sell.

Really the bottom line is, you are never going to be younger or prettier than you are now. Hurry up and make a decision!