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Thread: Mortgage Renewal Time

  1. #21

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    Re: Mortgage Renewal Time

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    Quote Originally Posted by PLau View Post
    I doubt they're open, that usually adds 3-5% on top of closed rates.
    Tangerine allows paying up to 20% of principal a year with no penalty. I am at prime -.85 variable. It's not often that you have that much money to throw at the mortgage, so it's open enough for me.

  2. #22
    nakkers's Avatar
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    Mortgage Renewal Time

    Bank of Canada next announcement for prime rate adjustment is July.

    No one knows for sure but, the financial industry and corporations are still anticipating a couple of more bumps before the end of the year.

    Relatively speaking, money is still cheap. The question to ask yourself is, how quickly do you want to pay off your mortgage and really how important is it for you?

    Once you pay off the house, whatís the plan? Use it to purchase something else that will appreciate in value better than the current one? Maybe Reno it to prop up the value more.

    My suggestion is to get a variable that can be converted to a fixed rate. Rates wont jump like crazy in the short term but, they will rise. And 0.25% over 25 0r 30 years can added up or 0.50% can increase your payments significantly depending on the balance you are starting out at.

    Fixed for 5 years, when renewal comes around, you might be looking at a market with a much different outlook for cost of borrowing.

    Personally, Ive seen the rates at 19.9% back in the early 80s and pretty much stay at 4% or lower since the middle 90s.

    I believe we have hit the bottom and swinging back up. Not by huge swing upwards but, up non the less.

    If you want to accelerate your payments to get mortgage fee sooner, there is no magic trick. Simply amortize the mortgage for a shorter period. So, itís not just the rate that is important. Brokers and banks will offer nice low rates and then encourage 30 years to pay off. So the payment looks nice. The rate looks nice but, itís a slow climb to pay it off.

    And that might not be a bad thing.

    Our plan, if you can call it one is, to have the house paid off before rates climb too high. By then, we can evaluate the marketplace for value of the property. Hopefully, itís appreciated nicely and we can do a reverse mortgage in addition to our pension to live comfortably.

    If you want to go no brainer, just lock in a 5 years, keep the same payment and have peace of mind. Some folks worry on variable rates when they hear they are increasing.

    Personally, variable rates a good for the tail end. When you donít owe a lot. Have decent equity. The payments arenít killing you. You can go monthly. But, the advantages of variable rates over the fixed in the last year havenít been great for anyone.




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    Last edited by nakkers; 06-13-2018 at 11:42 AM.

  3. #23

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    Re: Mortgage Renewal Time

    Quote Originally Posted by nakkers View Post
    If you want to go no brainer, just lock in a 5 years, keep the same payment and have peace of mind. Some folks worry on variable rates when they hear they are increasing.

    Personally, variable rates a good for the tail end. When you don’t owe a lot. Have decent equity. The payments aren’t killing you. You can go monthly. But, the advantages of variable rates over the fixed in the last year haven’t been great for anyone.
    Unless you are finishing paying off your mortgage in the next 5 years, I don't think it's that simple. Taking the fixed rate means you will pay off substantially less principal over the 5 years. When it is time to renew, rates will be whatever they are. If they are 2% higher (probably the highest increase I could see) at renewal, your available fixed and variable rates will both be roughly 2% higher. Going with fixed for the first term now means you have more principal at the higher rate and therefore lower affordability.

    Now if you go with Brian P's excellent suggestion of using the variable rate product but paying the fixed rate monthly price, you have the best of both worlds (assuming there is not a shocking rate increase, but I can't see that happening as the fallout would be horrendous).

  4. #24

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    Re: Mortgage Renewal Time

    Variable... currently paying 2.25%. I can call and switch it to a term immediately... if I wanted to.

    I would question why someone would want to pay down their mortgage when rates are so low... Most will have some other debt that costs more than their mortgage that they should concentrate on getting rid of first... Or park the extra cash in something that is earning more than the mortgage costs, but is still easily accessible if needed.

    I only have a mortgage because it's so cheap... If need be... I could pay it off in a days notice.

  5. #25

    Re: Mortgage Renewal Time

    Thanks for all the info.

    On the variable rates we were offered, there are pre-payement options with no penalty 1x a year if we wanted to throw up to 20%, but we aren't interested in that. Our investments currently make much more gains than the cost of borrowing.

    I think our house is supposed to be paid off in 16 years at our current pace and we plan to live here about this long.

    Since we already know that we can well afford the 3.19% we have been paying for the last 5 years, it seems to make the most sense to go with variable and either bank the savings into a slush fund should rates rise, or just keep the monthly payments the same to pay it off slightly quicker.

    We also own a rental condo that will be paid off in 6/7 years, so maybe we will throw more money at the house once the condo turns into monthly income.

    On a side note, the prices for average rent in the city are getting pretty crazy now too.
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