Quote:
Originally Posted by blankall
I went fixed with my last two mortgages, as things were really low. Only for 5 years. After having lived through this latest experience, I'd definitely go for a 10 year fixed if things ever got to around 2.5% on a 10 year again.
You have to weigh the value of certainty in your bill payments.
Right now though, I'd go variable. My current mortgage holder, CIBC, has a .8% spread between variable and fixed. I see rates going below .8% of where they are now.
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Hindsight is different though. If the offer was 2% and you locked in 10 years at 3%, that extra 1% means $1000 per $100K in mortgage. For a $500K mortgage, that's an extra $5K a year compounding. You'd have to be certain that the average savings is 1% or more for more than half the mortgage and that's complicated by the concept of TVM.
Certainty is one thing, but IMO not at those costs. It might make more sense if you had a lower (ie: <$400K) mortgage outstanding, but at that point, you're better off aiming for an aggressive 5-10 year payment and lump sum plan to pay off the mortgage for the certainty of no more mortgage payments IMO.
0.5% doesn't seem like a lot, but on a $500K mortgage, that's still $2500 or a little over $200 per month.