Outline your goals before choosing a mortgage
Before you decide whether to go variable or fixed, outline your goals. For example, If you are looking to pay down your mortgage debt as fast as possible, you will likely want a different product than if you want to maximize cash flow.
Variable rate mortgages versus fixed rates mortgages is only one of the things you’ll need to decide. It is also really important to consider other mortgage options you might not know about such as lump sum and flexible payments. You can talk through your goals with your mortgage broker to help you assess the options at a number of different lenders.
Run the numbers on different scenarios
Ask your mortgage broker to run the numbers on different scenarios. If interest rates rise by 1% in the next 5 years, how much more you will pay in interest, versus if rates stay put. How does the math change if rates go up by 2%? And how much will your monthly payment change in each of these scenarios.
You should know that many lenders will let you “fix” your payment even if you have variable rate mortgages. What this means is that as rates rise you’ll simply pay more towards interest than and less towards the principle. This is a way to have certainty with your monthly payment, but without paying the higher rate to go fixed.
Know yourself and how you feel
The third factor is your emotions. The GLM Mortgage Group provides this litmus test on whether to choose variable or fixed: “If you are driving in to work and you hear that the Bank of Canada is raising rates, will this cause you to panic, pull over and call me? If so, you should go fixed. Variable clients need to be okay with fluctuation.”
Signing up for your first mortgage is a big deal. Ask questions to ensure that you get the best product for your circumstances, and when it comes up for renewal in five years ask these questions all over again. Don’t fall into the trap of renewing without thinking because you may miss out on getting the best deal available.
To learn more and to get the best variable mortgage rates contact the GLM Mortgage Group to get a fast ‘YES’ at the sharpest rate guaranteed.
If you want the best rate for a variable rate mortgage visit GLM Mortgage Group for all the options available to you.