If you take variable for what it is... Variable.. then it is a great way to go. It saves me about $300-$400 a month on mortgage payments. However, if the rates go up (it's just a matter of time). I am able to make those additional payments. So why would I pay the bank the extra interest for the time that the rates are low?
It all boils down to what you are comfortable with. Fixed offers you the comfort of knowing that for the next ____ years you will be making the same payment every month. Variable offers me a lower payment with the knowledge that there is a chance that the interest rate might go up in October, followed by January and every three months after that (when the BOC meets to discuss interest rates).
I am personally pro-variable. If you do the math and you look at the historical numbers, 90%+ of the time you will be further ahead to be on variable than on a fixed mortgage.
Now if I was really smart, I would be making the equivalent payment of a fixed rate mortgage on my variable rate mortgage which would pay down my mortgage MUCH faster.
it looks great now, but when 2.2% becomes 3.5%, and you were skimping by on 2.2% it doesn't look that great..
This is key with Variable...don't ever buy if you are just skimping by at the variable rate... ESPECIALLY the current variable rates...they are going to go up.
Topic: calgary realestate (Read 5119 times)