I had posted about the market on May 30th and still holds true...
It's hard to tell which way it will go... Best to keep in touch with an agent that is busy with listings and advertising and know how the buyers are reacting to the latest market...
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Ask me anything about Real Estate
- Thread starter Addy
- Start date
I had posted about the market on May 30th and still holds true...
It's hard to tell which way it will go... Best to keep in touch with an agent that is busy with listings and advertising and know how the buyers are reacting to the latest market...
konopsy88
Member
thank you! does make sense, think I'll stick to fixed rate to avoid extra fuss
Nice that you are here to helpI've been researching to buy property in Peterborough and mortgages give me a lot of headache. Could you advice about floating rates? These mortgage tips https://tranio.com/traniopedia/tips/foreign-mortgages-top-10-hidden-pitfalls/ advise that they are more risky. Is it wise to take them with the current situation on the market? I'd like to stick to floating rate only if it is safe and really worth doing
It's important to clarify what you mean by "risky." I presume you mean your payments will spike/double with a variable (floating) rate? That's a misconception.
You can get a variable rate mortgage with a payment to absorb small interest rate hikes... meaning your payment does not change, but the balance of what goes to principal each month changes. Historically, as @GreyGhost mentioned, variable rates mortgages have (for the most part) cost less to homeowners than fixed mortgages.
Big banks will convince you that a five-year fixed is the safe choice, but that is not necessarily the case. Fixed rate mortgages come with a big penalty to break (cancel) them early. The longer the time you have left on your mortgage, the bigger the penalty. This penalty is called an IRD -- Interest Rate Differential, and can be in the thousands of dollars. Typically, the penalty to break a variable rate mortgage is three months' interest. Read your mortgage contract and ASK whomever you are getting a mortgage from before signing to confirm!
The other note to consider is you can qualify for a larger mortgage with a five-year fixed versus a variable-rate mortgage. For the five-year fixed, you qualify for the going rate of that mortgage. For the variable rate, you need to qualify at the Bank of Canada's benchmark rate (currently at 4.64%). That is typically a 20%-ish difference in the mortgage amount you qualify for.
Here is a great article that compares fixed and variable rate mortgages: http://dustanwoodhouse.ca/fixed-vs-variable-consider-penalty-implications
There is a lot to consider when it comes to mortgages, and what the right mortgage is for your needs. Your strategy for buying an owner-occupied residence vs. a rental property will also impact your choice of mortgage. Work with a professional to help you. I recommend an independent mortgage agent (since they have access to more mortgage options than the bank), but that's because I'm biased.
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I agree that a specialist at the bank is hardly the best expert for advice...but in all honesty I've tried dealing with many brokers over the years, and not a single one has been able to beat or provide me with a better rate/offer/terms than the bank has offered me.
The way I see it I'll work with you if you can save me money, if not then ... what's the point?
I have all my accounts at BMO, both mortgages at BMO and will most likely renew with BMO because frankly their rates couldn't be beat at the time. When it's time to renew I'll look again, but for now no point in switching.
Hey Addy any thoughts on this:
https://www.thestar.com/business/re...o-home-sales-decline-continues-into-june.html
Seems like each day there's an article touting the market is good and strong, and then contradicted the next day by the market is falling....which is it!?
https://www.thestar.com/business/re...o-home-sales-decline-continues-into-june.html
Seems like each day there's an article touting the market is good and strong, and then contradicted the next day by the market is falling....which is it!?
The market is definitely shifted. Just saw the numbers for July and number of transactions are down 40% but prices are holding steady. I'm currently in the market shopping for a home as everything is on sale
Bumporama!
Our 5year mortgage is almost up for renewal. We are going with a fixed mortgage for another 5yr term.
We will likely go with a broker, because the bank sent a 'special' renewal rate of 3.69%.
I have not yet reached out to the bank to see how much lower they will go.
We will also want penalty free options to pay it down faster during this 5year term, in addition to the standard biweekly payments.
Any thoughts or suggestions?
Our 5year mortgage is almost up for renewal. We are going with a fixed mortgage for another 5yr term.
We will likely go with a broker, because the bank sent a 'special' renewal rate of 3.69%.
I have not yet reached out to the bank to see how much lower they will go.
We will also want penalty free options to pay it down faster during this 5year term, in addition to the standard biweekly payments.
Any thoughts or suggestions?
If you have enough equity in the home, swap your mortgage for a line of credit.
With all the chatter of increasing interest rates, if I needed one, I would lock in now into the longest (at least 10 years) mortgage I could find.
I suffered through 15% - 20% rates in the 80's.
Why get the line of credit? I'm not following the rationale for that.
We only have about 20% equity in the home from purchase price, but the home's current value is about 180% of what we paid for it 4 years ago.
My broker just got back to me with a high rate of 3.44% and some others are lower depending on the lending institution.
A 10 year mortgage is considerably higher - almost a full percentage point! I know it's not anything like the insane rates of the early 80's, but we can weather a significant rate upheaval if it goes crazy in 5 years at next renewal. The goal for now is best rate with most flexibility for prepayments.
We only have about 20% equity in the home from purchase price, but the home's current value is about 180% of what we paid for it 4 years ago.
My broker just got back to me with a high rate of 3.44% and some others are lower depending on the lending institution.
A 10 year mortgage is considerably higher - almost a full percentage point! I know it's not anything like the insane rates of the early 80's, but we can weather a significant rate upheaval if it goes crazy in 5 years at next renewal. The goal for now is best rate with most flexibility for prepayments.
I'm still variable with tangerine at 2.55. They have done the same dirty tricks as the rest of the banks (eg 0.5 BOC rate cut generates a 0.25 mortgage cut, but a 0.5 raise generates a 0.5 raise). Their prepayment policy is hard to fault (up to 20% of original principal every year without penalty).
That's pretty good. I had a variable mortgage on my place before this one and at prime minus .8, I was a happy camper. Your annual prepayment allowance is pretty much what we would be looking for.
Variable with a very flexible terms. I've gone fixed only once and it lasted only 2 years out of 10 year term (and it was really a good long term rate) before I pulled a pin on it. I am not sure I will go fixed ever again ... something very dramatic would have to happen.
That's why my 1st question was about equity.
The loc worked in my case - that was nearly 20 yrs ago.
I remember feeling more 'in control', re making extra payments, and you mentioned that.
What happens if the rates are 6 - 7 points higher in 5 yrs? ( it makes the 10yr more attractive now, even at 1 point more than the 5yr.)
Keep in mind - the economy is in the 9th year of a bull run!
Do they still have 20yr mtgs?
The chance of 6-7 percent higher in 5 years is incredibly close to 0. Last I checked there have only been about 5 years in the last 80 or so where a fixed rate mortgage beat variable. That being said, as I wrote above, they are messing with the formula now by only giving you half the drops but all of the increases so I expect the future for variable won't be so overwhelmingly postive.
What yr did you get your 1st mtg?
Yeah, the country would fall into turmoil a lot sooner that that ... think 3 points already creating a huge tsunami. No way the feds could do that. What was possible 30 years ago is simply impossible today ...
Long after terrible rates. That doesn't change the fact that even when rates were ridiculously high, in the vast majority of years, variable was still cheaper than fixed.
Here is 1986 to 2011. I would like to find one that goes back another few decades as obviously rates on the way up is the interesting part of that data.
http://www.bestratefinancial.ca/wp-...ncial/downloads/br_Historical-Rate-Sheets.pdf
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The whole thing would be an interesting thought experiment if it wasn't so frightening. Correct me if I'm wrong, but when rates were ~18%, house prices were ~2x income. With GTA house prices ~10x income with ~3.5% interest, the percentage of your income paying mortgage interest is in the same ballpark. An extra % or 2 of interest is a giant amount of money given the size of the loans (and corresponding inability to quickly eliminate principal in the good years).
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I like that link. Wish it showed 1982. I think the rate was right around 5% .. when I bought my 1st house, but i could have been more?
See how fast it can get to 13%?
I don't think anyone is disputing fixed vrs variable, it's just a crap shoot dealing with pennies. Sleep is often better had with a fixed, during turbulent times (from experience).
My dad was locked into a 25yr at 3.25%. That was in 1955. He paid $8,000 for a brand new house....lol.
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http://www.bestratefinancial.ca/wp-c...ate-Sheets.pdf
BTW, these are not the best market rates one could get for residential mortgage .... not sure what exactly "CHARTERED BANK ADMINISTERED INTEREST RATES" means, but clearly they are much higher than what I have paid in the last 10 or so years to my bank looking at the variable rates ... anywhere from 1%-3% the highest I have ever paid.
BTW, these are not the best market rates one could get for residential mortgage .... not sure what exactly "CHARTERED BANK ADMINISTERED INTEREST RATES" means, but clearly they are much higher than what I have paid in the last 10 or so years to my bank looking at the variable rates ... anywhere from 1%-3% the highest I have ever paid.
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