Should I go fixed or variable, It is a common question we get. The answer really is it depends on you  and your risk tolerance.

Let’s talk about each one independently.

A variable rate mortgage is priced and affected by the Bank of Canada’s overnight lending rate which determines the banks’ prime lending rate which is what variable rate mortgages are based on. The most important thing to consider when looking at a variable rate mortgage, and I am really, really passionate about this, in today’s uncertain economy and volatile market.  I think it is financial suicide to do a variable mortgage with a bank or lender who has absolutely no strategy or plan in place to watch that mortgage for you throughout the coming months and years.

Let’s talk about the fixed rate. The fixed rate obviously is that you get a rate today and it will stay fixed for the term that you choose, one year, three year, five-year, whatever it might be. But let’s talk about something that is really interesting about that. I Think something we don’t often talk about is that people assume the fact that if I have a fixed rate mortgage for the next five years I have no risk if the market changes or the volatility of the market. The reality is that you do because particularly now if we are at very low record historical interest rates, if you get a mortgage today at a very low interest rate and it slowly goes back up to the more normal rate as the economy approves for the next five years, when you come up for renewal you are going to be hit with a relatively nasty payment shock. Maybe as high as three or four-hundred dollars per month increase your payment, just like that!

We have a strategy called the Inflation Hedge Mortgage Strategy which is specifically designed to protect you against that happening.

For more information on that check out our video in our series called The Inflation Hedge Mortgage Strategy.

Thanks for watching.

If you would like more information on this or other mortgage related topics contact Canada Mortgage Direct in one of the following ways:

Visit our website at CanadaMorgageDirect.com.

You can phone our office: 403-250-2100

Or you can email us at Save@CanadaMortgageDirect.com

We would also like to invite you  to the Canadian home Buyers Academy and you can visit us there at the CanadianHomeBuyersAcademy.com

Thanks again!

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