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Old 04-25-2016, 02:12 PM   #12
Mortgage Made Easy
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Originally Posted by GreenLantern View Post
The last time we saw our mortgage broker she was really pressuring us to go with a variable rate and the option to lock in at 'any time' over a fixed rate. I've always been a fan of a fixed rate as you know exactly what you are paying all the time. I understand that variable rates dont just change on a whim, but which do you generally recommend to your clients?
Hi GreenLatern,

Choosing between Fixed and Variable is a little more complicated than that. The choice is a personal one and what works for one person may not work for the other.

With the small spreads between fixed and variable, you cannot go wrong with going fixed if that is your preference.

There are some pros for variable, one being that your penalty is always going to be 3 months interest (some conditions may apply, most lenders this is the policy but there are some specials out there where this rule does not apply - larger penalties may apply)

As mentioned, if someone is trying to determine which to choose, it is important to sit down with someone who can provide insight and lender choices. One big component of taking either rate is a strategy that fits your financial goals... paying off your mortgage, buying another property, invest, pay off debt etc...

I don't recommend or think that taking a variable rate... and having the option to lock in, if rates rise is a wise strategy. Reason being, by the time you are ready to lock in, the fixed rates will likely have risen enough where it makes no sense to lock in... and you can lose any gain or savings you have made. It is MORE important to take a proactive approach with variable rate then a wait and see approach.... this can yield a greater savings even if Prime rate rises.

If you are interested in sitting down to discuss your situation, I am available to schedule a meeting. As I mentioned, everyones situation is unique and so is the solution.
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