Quote:
Originally Posted by fleury
One thing people should be weary of fixed mortgages are the stiff penalties to break them. With a variable rate at least it’s about three months interest as the penalty. With fixed rates it isn’t calculated the same across most lenders and the penalties are a lot higher. I’m on variable and oddly with cibc the payments are staying the same, but the proportion of what’s going to interest vs. principle is shifting each month more and more towards interest. I do think a year from now when the recession is official things should lower a bit so I think not locking in was a good idea, especially if I want to sell, I won’t no part of those fixed rate penalties.
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That's actually the exact same situation as mine, same bank and everything. I didn't lock in because of the penalties associated with fixed... thought maybe the rates would go up a bit, but not this much. It's a double-edged sword - my monthly payments haven't increased, but the proportions of interest and principal have obviously changed. Took the variable as well because if a certain leader becomes premier next year, I wanted the option to leave the province if need be. That, and possibly exploring other career opportunities as well.
That said, I'll be putting more pre-payments on going forward. Or take that amount and invest it, try and beat the mortgage interest rates on return, and make a bigger lump sum payment upon renewal. Haven't decided yet.