Go Back   BuildingHomes.ca - Building your community! > General > Financing, Mortgages and Insurance

Financing, Mortgages and Insurance What options are best for you and your situation?


Reply
 
Thread Tools Display Modes
  #1  
Old 2009-09-13, 11:01 PM
FadedBlue FadedBlue is offline
Senior Member
Regular User
 
Join Date: Sep 2008
Location: Ottawa/surrounding
Posts: 178
Arrow If a var.mortgage can be changed any time to fixed, why'd u take fixed if its higher

so like the title was asking
if in fact you can switch over from variable to fixed at any time
then why would anyone take a 'fixed' off the bat if the rate's higher than the variable (which it is right now)..
Wouldn't you just switch to fixed when you see the variable rates starting to increase...

anyone?
Reply With Quote
  #2  
Old 2009-09-13, 11:34 PM
SoNgMaN SoNgMaN is offline
Senior Member
Regular User
 
Join Date: Mar 2009
Location: Newmarket
Posts: 645
Default

variable depends on the prime rate. fixed rate does not. if BoC came out and jacks the prime rate to stem inflation you'll be paying more. but at the same time the fixed rates may also be on the rise.

in the long run you could save locking in at 4%. but it's a crystal ball type thing. have a look at some of the historical rates. late 80s to early 90s will provide a fairly decent idea of what you could be looking at in terms of lending rates in 4-5 years.

I think I'm going to test the variable rate myself for at least a year.
__________________


Reply With Quote
  #3  
Old 2009-09-14, 07:28 AM
Jenny1975 Jenny1975 is offline
Senior Member
Regular User
 
Join Date: Sep 2008
Location: Ottawa
Posts: 558
Default

Because if you decide you want to switch to the fixed rate at some point, you will usually be stuck with the bank's posted rate at that time, which is generally not very good.

Quote:
Originally Posted by FadedBlue View Post
so like the title was asking
if in fact you can switch over from variable to fixed at any time
then why would anyone take a 'fixed' off the bat if the rate's higher than the variable (which it is right now)..
Wouldn't you just switch to fixed when you see the variable rates starting to increase...

anyone?
Reply With Quote
  #4  
Old 2009-09-14, 12:55 PM
minto_home minto_home is offline
Senior Member
Regular User
 
Join Date: Aug 2009
Location: Ottawa
Posts: 289
Default

Simply because whenever you switch to the fixed rate mortgage you only get the then rates and not today's fixed rates. So if rates are in general higher, your fixed rate then would be higher too.

i've been thinking of going variable but this news abt the expectation of prime rates going up fairly steeply (if and when BoC eventually starts raising them) is giving me serious grief. At this point I might just sit quiet and stay with a fixed rate ... just to be safe.
Reply With Quote
  #5  
Old 2009-09-19, 12:54 PM
Lupini Lupini is offline
Senior Member
Regular User
 
Join Date: Sep 2008
Location: Newmarket, Ontario
Posts: 126
Default

Quote:
Originally Posted by minto_home View Post
Simply because whenever you switch to the fixed rate mortgage you only get the then rates and not today's fixed rates. So if rates are in general higher, your fixed rate then would be higher too.

i've been thinking of going variable but this news abt the expectation of prime rates going up fairly steeply (if and when BoC eventually starts raising them) is giving me serious grief. At this point I might just sit quiet and stay with a fixed rate ... just to be safe.

Minto is correct, variable rates although seperate from fixed rates, due tend to increase and decrease with the market place. Typically what you'll find is that fixed rates will increase as the BOC rate increases even though there is no real correlation.

To be sure what works for you, see what your varaible deal is now and how long you expect rates to stay this low. BOC says rates wont change until atleast mid-2010 and some economists forecast that rates will stay consistent until at least 2011. What you want to compare is whether being in such a low rate for a year or two and a higher rate in the last few years still makes financial sense. A lot of times being in a variable for a period of time prior to changing to a fixed actually saves you money then if you had been in a fixed rate the entire time. To be honest, historically speaking, you'll always save money going variable. However, market timing is important as well.
Reply With Quote
  #6  
Old 2009-09-20, 10:04 PM
oakvillehomeowner oakvillehomeowner is offline
Senior Member
Regular User
 
Join Date: Mar 2006
Posts: 1,860
Default

Quote:
Originally Posted by Lupini View Post
Minto is correct, variable rates although seperate from fixed rates, due tend to increase and decrease with the market place. Typically what you'll find is that fixed rates will increase as the BOC rate increases even though there is no real correlation.

To be sure what works for you, see what your varaible deal is now and how long you expect rates to stay this low. BOC says rates wont change until atleast mid-2010 and some economists forecast that rates will stay consistent until at least 2011. What you want to compare is whether being in such a low rate for a year or two and a higher rate in the last few years still makes financial sense. A lot of times being in a variable for a period of time prior to changing to a fixed actually saves you money then if you had been in a fixed rate the entire time. To be honest, historically speaking, you'll always save money going variable. However, market timing is important as well.
fixed rates move with the long term bond market, which the bank of canada has little influence over.
Reply With Quote
  #7  
Old 2009-09-21, 02:47 PM
Lupini Lupini is offline
Senior Member
Regular User
 
Join Date: Sep 2008
Location: Newmarket, Ontario
Posts: 126
Default

Quote:
Originally Posted by oakvillehomeowner View Post
fixed rates move with the long term bond market, which the bank of canada has little influence over.
Bond rates and interest rates adveresly affect each other. If bond rates rise, interest rates drop and vice versa. Variable rates will never be the same as fixed rates.
Reply With Quote
  #8  
Old 2009-09-21, 05:14 PM
oakvillehomeowner oakvillehomeowner is offline
Senior Member
Regular User
 
Join Date: Mar 2006
Posts: 1,860
Default

Quote:
Originally Posted by Lupini View Post
Bond rates and interest rates adveresly affect each other. If bond rates rise, interest rates drop and vice versa. Variable rates will never be the same as fixed rates.
i agree that variable and fixed rates are not connected, but what are you referring to by "bond rates"?

if bond prices rise, the yield (effective interest rate) drops and fixed mortgage rates should drop.
Reply With Quote
Reply

Bookmarks

Thread Tools
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off

Forum Jump

Similar Threads
Thread Thread Starter Forum Replies Last Post
Raywal - Kitchens still to be fixed? 44Hoppington Stouffville - River Ridge, MainStreet and Country Lane 6 2010-05-18 04:40 PM
3.59% on a 5-year fixed EBLAIR Financing, Mortgages and Insurance 0 2009-04-28 03:15 PM
Fixed to Variable john55 Financing, Mortgages and Insurance 2 2008-12-12 11:32 PM
Mortgage rates? variabla or Fixed?? KellyM Financing, Mortgages and Insurance 14 2008-03-14 09:23 AM
Our lot has been fixed! Coming to Milton! Milton - Hollybank 8 2006-10-30 11:27 AM



All times are GMT -4. The time now is 06:49 AM.



Copyright © PHAND Corporation
This document may not be used elsewhere without the expressed written consent of PHAND Corporation.
*** There is no association between this website and any builder. ***

Powered by vBulletin® Version 3.8.10
Copyright ©2000 - 2019, vBulletin Solutions, Inc.