Moving Checklist

Moving into a new homewhether it is your first time or fifth time is an exciting time but, it can also be stressful. Don’t despair. Whether you’re doing it yourself, asking friends for a little help or hiring professionals, here is your moving guide to help get you through it.

1.      As Soon As Possible:

• Start early. Investigate and research moving companies and/or truck rental companies.
• Hire a moving company or if you’re doing it yourself, reserve a moving truck. Be sure to get written confirmation of all your costs and details of your move for your records.
• TIP: Weekends and holiday long weekends are busy times for movers and truck rental companies. Book far in advance (at least 2 to 3 months) to ensure everything is ready for the day you need to move.

2.      Two Months Before Moving Day:

• No sense moving what you don’t want to keep. Go through your home and determine what you want to keep and what you want to throw out or donate.
• TIP: If moving in spring or summer, earn some extra cash and hold a moving sale to help get rid of items you don’t need or want for your new space.
• Make a list of items in your home that need extra attention while moving or special packing instructions (i.e. computers, televisions, fine china, etc.)
• If you have children and you are moving to a new school district, start arranging the school transferring process.
• Order boxes and moving supplies (packing tape, bubble wrap, tissue paper, stock up on newspaper, etc.) required for your move. 

3.      One Month Before Moving Day:

• Time to start packing! To make it easier, begin with the items in your home you do not use regularly. Be sure to clearly label or number your boxes to make the unpacking easier.
• As you pack, make note of items of significant value (i.e. stereo systems, flat screen televisions). Depending on your insurance agreement with your moving company, you will need to declare items of value in case items are lost or damaged.
• At your local postal office, fill out a change of address form with your new address.
• Inform the following companies and institutions about your new address: Banks, Cable and Phone providers, Insurance Companies, Hydro and Utility Companies, Credit Card Companies, Doctor and Dentist offices, Any subscriptions you may have.
  

TIP: Many companies now offer the convenience of changing address information online.

4.      Two Weeks Before Moving Day

• Confirm your reservations with your movers or truck rental company.
• If required, cancel or transfer your newspaper delivery service.

5.      One Week Before Moving Day

• Most of your packing should be done one week prior to moving day.
• Set aside the items of importance you wish to transport to your new home yourself (i.e. jewellery and passports).

 6.      A Few Days Before Moving Day

• Re-confirm arrival time of your moving truck.  If moving yourself, check with the truck rental company to confirm your reservation.
• Prepare a detailed map and directions for your movers including cell phone numbers you can be reached at during the day.
• Pack a travel bag with the items your family may need on moving day such as tooth brushes, change of clothing, medications, hair brushes, soap, toilet paper, etc.
• If you are moving yourself, start dismantling beds and other large furniture.

7.      Moving Day

• Make a note of all utility metre readings (new and old home).
• It’s important to be present when the truck is being loaded and unloaded just in case your movers have questions.
• Before the movers leave, check your belongings and note on the inventory paperwork any damaged items.
• Change the locks on all your doors and if applicable windows.

 

TIP: You are now Done!!!  Grab some take out and enjoy the first day of your new home!

Bridge Financing

Bridge Financing or Bridge loans are designed as a short-term lending option. This loan product has a much higher interest rate and is designed to be paid off once long-term financing is secured. Many use this type of loan when purchasing a new home while trying to sell their existing property. Since these loans are more complicated than conventional financing, many individuals become confused about calculations. Here’s how to calculate a bridge loan.

The bridge amount is the equity that is not available on closing.  This is the amount that the purchaser is using as a down payment on their home.  Therefore as an example:

 

If the purchase price is                    $450,000.00

Deposit amount is                           $100,000.00

The Bridge amount is                      $100,000.00

 

Typically the interest rate charged on the bridge amount is 2 – 5% higher than the bank’s posted 5 year rate.  Today that rate would be 7.24% or approximately $26.71/day in interest charges.  There is usually a set up fee as well of approximately $250.00. 

Therefore, the cost of bridging for 2 weeks on a deposit amount of $100,000.00 would be approximately:

$378.00 in interest + $250.00 Set up = $628.00 plus the costs of carrying two homes and two mortgages.

Some of the tips when obtaining bridge financing would be:

1. Always ensure the bridge financing is taken for an additional 2 days than is required just as a cushion for holidays, bank requirements, etc.

2. The cost for bridge financing is done a per day interest charge however, the true COST of the bridge is

• The payment of the current mortgage of the property that is not yet sold
• The payment of the new mortgage on the property just purchased
• The interest on the bridge financing
• Other related costs to carrying two homes.

 

Whether you are looking to refinance to pay off debt, purchase a second home/vacation property or invest –  breaking your mortgage is going to cost you!

Prepayment penalties are the banks way of recouping the interest lost on a mortgage that doesn’t complete the full closed term that was originally agreed upon by you, the borrower and them, the lender.  Knowing what these costs are before you proceed with changing your mortgage, is the best way to determine if this is beneficial for you or not. 

A professional Mortgage Broker will be able to show you the pros and cons of breaking your mortgage term.  They will assist you in calculating the penalty and in the case of paying off debt, determine if the savings in interest will offset that penalty. 

In some cases it is unforeseen circumstances that force you to break the term of your mortgage prior to maturity.  Your mortgage broker can still find out if the mortgage is portable to another property, transferable to another person or in some cases, they may be able to negotiate less of a penalty on your behalf. 

Knowledge is Power and a mortgage is not only about a Rate.  Consumers should also be concerned about the actual mortgage product itself.  Before signing the mortgage commitment they need to ask their mortgage broker what are the prepayment privileges and penalties.   

Life can change in a moment and being informed and prepared is the best way to handle any circumstance.

 

Don’t get stung by the Banks!

Give me a call today at 905 793 0700 ext 370

 

With the high cost of holiday gift-buying and entertaining now behind you, this may be the perfect time to get the New Year off to a fresh start by refinancing your mortgage and freeing up some money to pay off that high-interest credit card debt.

By talking to my Mortgage Team, you may find that taking equity out of your home to pay off high-interest debt associated with credit card balances can put more money in your bank account each month.

There are penalties for paying your mortgage loan out prior to renewal, but these could be offset by the extra money you could acquire through a refinance.

With access to more money, you will be better able to manage your debt. Refinancing your first mortgage and taking some existing equity out could also enable you to make investments, go on vacation, do some renovations or even invest in your children’s education.

Keep in mind, however, that by refinancing you may extend the time it will take to pay off your mortgage. That said, there are many ways to pay down your mortgage sooner to save you thousands of dollars. Most mortgage products, for instance, include prepayment privileges that enable you to pay up to 20% of the principal (the true value of your mortgage minus the interest payments) per calendar year. This will also help reduce your amortization period (the length of your mortgage), which, in turn, saves you money.

If homeowners fail to take the time to thoroughly research their options through a professional Mortgage Broker and, instead, simply sign renewal offers received from their bank, credit union or other lender, they could end up paying thousands of dollars more per year in interest. Simply by shopping your mortgage with myself a qualified mortgage broker, you can access the banks as well as other lenders that you may not have considered, but which can often offer interest rate specials or other attractive terms.

In the current credit-crunched lending environment, now more than ever it’s important to take the time to contact Tracey Brock, Mortgage Broker to get a professional opinion and find out your options.

By refinancing now and paying off your debt, you can put yourself and your family in a better financial position. It’s very important to not rack up your credit cards after refinancing, however, so set your goals and budgets, and stick to them!

Remember, as a wise man once said to me –

Never sacrifice what you want most for what you want now.

Kevin Cochrane, Enriched Academy

 

Don’t get stung by the Banks!

 

Give me a call today at 905 793 0700 ext 370

 

BUYING vs RENTING

At some point in their lives, most Canadians have probably asked themselves whether it is better to buy or rent a home. Purchasing a home is one of the biggest decisions most people ever make and it is definitely worth consideration before you make that large of purchase.  I mean, I have trouble deciding to buy a new pair of shoes without the careful consideration of whether my old ones are really ready for the round bin. 

Ultimately, the decision is a personal choice.  However, it does help to look at the ups and downs of buying to determine whether home ownership is right for you.

Some advantages of buying a home

Owning a home is generally considered to be a sound, long-term investment that can provide satisfaction and security for you and your family.  Each month when you make your mortgage payment, you are building equity in your home.  Equity is the portion of the property that you actually build through your monthly payment versus the portion that you still owe the lender.  In later years, this equity can be used to reinvest into other properties or investments, even pay for your child’s higher education.

There is also a tax advantage. If your home is your principal residence, any profit you make when you sell it is tax-free. A home can appreciate – or increase in value – as time passes, building more equity. As you build up equity, it’s usually easier to upgrade to a new home in the future thanks to the profit you’ll make when selling your current home.

My personal favourite is pride of ownership.  It just feels good to own your own home.  Decorate and renovate the way you like. Investing in yourself oppose to investing in your landlord is a great idea!

Some disadvantages of buying a home

It’s easy to get caught up in the excitement of buying a home, therefore it’s important to remember that home ownership has some additional responsibilities as well.  For one thing, a home can be expensive. Chances are, your monthly payments will be more than what you are currently paying in rent when you factor in such things as your mortgage, property taxes, repairs and general maintenance.  Owning a home ties up some of your cash flow and is likely to reduce your flexibility to move to a new location or change jobs.

While your home might increase in value as time goes by, don’t expect to get a big return quickly. There are no guarantees that your home will increase in value, particularly during the first few years. In the beginning, you could actually lose money if you sell, because your home may not have appreciated enough to cover the real estate fees, moving, renovation and other selling costs.

Bottom line, Real Estate is usually considered a good sound investment over the long term.  That means when you are ready to begin and you have made the decision to buy, it’s important to carefully choose a home you can afford and always speak to a professional Mortgage Broker.  They can offer you invaluable advice and 99% of the time, their time and advice is free.

Know your options.  It is not out of reach. Millions of people enjoy the rewards of home ownership every day! You can too!

 

Don’t get stung by the Banks! 

Give me a call today at 905 793 0700 ext 370

 

 

What is a Mortgage Amortization?

Buying a new home is a very exciting yet at times, confusing moment in your life.  Many of my first time home buyers become overwhelmed with the new terminology that is being thrown at them from all angles.  Beacon Scores, GDS/TDS, Variable Rate, Adjustable Rate, etc.  Today I would like to take the time to explain what the word Amortization means as it applies to mortgages and how it is different from the mortgage term.

Wikipedia defines an Amortization Schedule as follows:

An amortization schedule is a table detailing each periodic payment on an amortizing loan (typically a mortgage), as generated by an amortization calculator. Amortization refers to the process of paying off a debt (often from a loan or mortgage) over time through regular payments. A portion of each payment is for interest while the remaining amount is applied towards the principal balance. The percentage of interest versus principal in each payment is determined in an amortization schedule.

While a portion of every payment is applied towards both the interest and the principal balance of the loan, the exact amount applied to principal each time varies (with the remainder going to interest). An amortization schedule reveals the specific monetary amount put towards interest, as well as the specific amount put towards the principal balance, with each payment. Initially, a large portion of each payment is devoted to interest. As the loan matures, larger portions go towards paying down the principal.

The Amortization of a mortgage is the estimated number of years it will take you to pay off your mortgage entirely. Typically, amortization periods range up to 30 years. Although, there are Prime Lenders in Canada, that will amortize your mortgage up to 40 years. The longer your amortization is, the lower your mortgage monthly mortgage payments will be.  However, the higher the amortization, results in more total interest paid over the life of your mortgage.

An amortization is made up of a number of mortgage terms.

A mortgage term is the length of time you have agreed to a certain interest rate and a specified payment schedule. A term can range from as short as 6 months to as long as 10 years. At the end of your term, also known as renewal, you can agree to a new interest rate and payment schedule, or you can pay off your mortgage entirely.  For example, at the end of a 5 year term with a 30 year amortization with monthly mortgage payments, your new amortization (or estimated time your mortgage will be paid in full) will be 25 years.

For more information on your mortgage and for a quick mortgage pre-approval, ask for me

Tracey Brock, Mortgage Broker, directly at 905 793 0700.

It’s about more than just mortgages and I am here to help you!

Why you Need a Professional Realtor®!

When you hire a REALTOR® you are not just gaining the support of a professional, but an individual who has hands on experience with today’s Real Estate Market.  REALTORS® are trained and regulated Sales Representatives who must adhere to a strict Code of Ethics and will guide you through every step of the home buying process.

Still not convinced?  Then let’s talk about what you need to do to ensure that you get the best value for your home, whether you are buying or selling.

TIME – One of the biggest challenges is there is never enough time in the day.  A REALTOR® will take the time to speak with you personally to determine your goals, search the market, assess your buying and/or selling power, arrange advertising and most importantly screen potential buyers that inquire about your home.  This is starting to sound like a full time job already!

EXPERIENCE – Is also knowledge and your REALTOR® is mandated to ensure that they are continually educated each year.  They do their research and are abreast of the marketplace so they know what the price of the home should be whether you are buying or selling.  They provide due diligence during the evaluation of your home and they advise you based on this experience.  This means, you are not going to pay too much for your home or deter potential buyers with an inflated selling price.

RESOURCES – It’s not just about hanging a sign on your lawn and advertising in the local paper or on the internet.  REALTORS® have a professional network of people that have access to their own buyers and sellers, many of which are not even actively listed or searching.  REALTORS® are viewing properties every day and can provide objective information about your home or the homes you are considering to buy. They are willing to spend the time and money to ensure that your home sells for the best price on your conditions or find you a new home that meets all of your needs!

SKILLS – The power of negotiation is a formidable tool and a real professional will manage this with ease.  The purchasing of a home is not only in the price, there are a myriad of negotiating factors that come into play – the most important one being emotion.  REALTORS® keep it professional.  They ensure that whoever they are representing, whether it be the buyer or the seller, everyone’s best interest are taken into consideration. 

Questions you should ask when looking for a REALTOR®

1.   How long have you been in the business?

2.   What is your average list-to-sales-price ratio?

3.   How will your marketing plan meet my needs?

4.   Will you provide references?

5.   What separates you from your competition?

6.   May I review documents that I will be asked to sign?

7.   Can you help me find other professionals?

8.   How much do you charge?

9.   What if I am unhappy with the service?

10. What haven’t I asked you that I need to know?

 

When it comes down to it, do we really have the time in our busy schedules to successfully

save money. 

Use a Professional REALTOR®.

 

Source: www.howrealtorshelp.ca REALTORS® is a registered trademarks of The Canadian Real Estate Association (CREA)

 

This Week’s Buzz

January-30-12

Why you Need a Professional Realtor®!

When you hire a REALTOR® you are not just gaining the support of a professional, but an individual who has hands on experience with today’s Real Estate Market.  REALTORS® are trained and regulated Sales Representatives who must adhere to a strict Code of Ethics and will guide you through every step of the home buying process.

Still not convinced?  Then let’s talk about what you need to do to ensure that you get the best value for your home, whether you are buying or selling.

TIME – One of the biggest challenges is there is never enough time in the day.  A REALTOR® will take the time to speak with you personally to determine your goals, search the market, assess your buying and/or selling power, arrange advertising and most importantly screen potential buyers that inquire about your home.  This is starting to sound like a full time job already!

EXPERIENCE – Is also knowledge and your REALTOR® is mandated to ensure that they are continually educated each year.  They do their research and are abreast of the marketplace so they know what the price of the home should be whether you are buying or selling.  They provide due diligence during the evaluation of your home and they advise you based on this experience.  This means, you are not going to pay too much for your home or deter potential buyers with an inflated selling price.

RESOURCES – It’s not just about hanging a sign on your lawn and advertising in the local paper or on the internet.  REALTORS® have a professional network of people that have access to their own buyers and sellers, many of which are not even actively listed or searching.  REALTORS® are viewing properties every day and can provide objective information about your home or the homes you are considering to buy. They are willing to spend the time and money to ensure that your home sells for the best price on your conditions or find you a new home that meets all of your needs!

SKILLS – The power of negotiation is a formidable tool and a real professional will manage this with ease.  The purchasing of a home is not only in the price, there are a myriad of negotiating factors that come into play – the most important one being emotion.  REALTORS® keep it professional.  They ensure that whoever they are representing, whether it be the buyer or the seller, everyone’s best interest are taken into consideration. 

Questions you should ask when looking for a REALTOR®

1.   How long have you been in the business?

2.   What is your average list-to-sales-price ratio?

3.   How will your marketing plan meet my needs?

4.   Will you provide references?

5.   What separates you from your competition?

6.   May I review documents that I will be asked to sign?

7.   Can you help me find other professionals?

8.   How much do you charge?

9.   What if I am unhappy with the service?

10. What haven’t I asked you that I need to know?

 

 

When it comes down to it, do we really have the time in our busy schedules to successfully

save money. 

Use a Professional REALTOR®

 

Source: www.howrealtorshelp.ca REALTORS® is a registered trademarks of The Canadian Real Estate Association (CREA)

 

 

 

September 12, 2011

This Week’s Buzz

Pre-Approval or a Pre-Qualification

Why is it important to have a Pre-Approval!

 When you are ready to purchase that new home one of the first steps you should be taking is to obtain a Mortgage Pre-Approval from a qualified Mortgage Broker.  It saves you time and provides you with a competitive edge when you start looking at those new homes with your Realtor.

 Don’t be confused!  There are two common terminologies in the Mortgage Industry Pre-Approval and Pre-Qualification.  I am here to tell you that there are dramatic differences with both.  Basically, a Pre-Qualification is an unofficial estimate or educated guess, of how much of a mortgage or new home, you can afford.  A Pre-Approval on the other hand, is an exact analysis of your personal financial status and income. A Pre-Approval letter from a lender verifies that you have the resources available to purchase a home for a certain amount and most importantly at a guaranteed rate. 

As you may know, a pre-approval carries a lot of weight in the Real Estate Industry. 

You now have a certified budget that allows you to make educated decisions when looking for homes in your price range.  In the long run, saving you time and money!

 

Be Prepared, speak with a Mortgage Professional! Realize your Dream of a New Home Sooner!

 

September 6, 2011

This Week’s Buzz

 Student + University/College = $$$$$$$

A Second Home for Your Scholar may be the Solution

Student Housing an Alternative Solution

Back to School Again!  Summer holidays are over and although most kids are excited with the adventure of a new school year, most parents are thinking of the costs that are incurred with post secondary education.  I have a solution that might not only save you money but possibly even earn you an income in the long run.

 The average cost per school year for Student Residence can range anywhere from $3500 -$7000.  Shared accommodations in a rental home or a one bedroom apartment can be anywhere from $500-$1000.00 for the rent alone and rarely includes utilities and other daily expenses.  In Waterloo, Ontario the average rent for a full house is upwards from $1500.00 per month.

I have a solution!!!

If you purchase a 3 bedroom home for your student instead of finding a rental property for them, not only could you earn up to $2000.00 in rental income you would also realize an appreciation of the value of that home at the end of your child’s education.  If you wanted you could also continue renting this property out after your child is completed to other students or professionals in the area.

 Borrowing costs are at near-historic lows!! With a minimum 5% down and on approved credit (OAC) you may even qualify for almost 0% down with a Cashback Mortgage.  Rates are similar to what your own home mortgage rates, terms and conditions are, and as long as your child lives in the home, he/she can sublet rooms to other students to help offset other home ownership costs.

Why spend a minimum of $36,000 over four years into someone else’s mortgage! 

Invest in your future and speak with a

Professional Mortgage Agent today!

 

August 29, 2011

 

 

This Week’s Buzz

Helping YOU choose the best Mortgage product.

Fixed Rate or Variable Rate

The decision to choose a fixed or variable rate is not always an easy one. It should depend on your tolerance for risk as well as your ability to withstand increases in mortgage payments. You can sometimes expect a financial reward for going with the variable rate, although the precise magnitude will ebb and flow depending on the economic environment.

 

Fixed rate mortgages often appeal to clients who want stability in their payments, manage a tight monthly budget, or are generally more conservative. For example, young couples with large mortgages relative to their income might be better off opting for the peace of mind that a fixed-rate brings.

 

A variable rate mortgage often allows the borrower to take advantage of lower rates — the interest rate is calculated on an ongoing basis at a lenders’ prime rate minus a set percentage. For example, if the prime mortgage rate is 3.0 percent, the holder of a prime minus 0.5 percent mortgage would pay a 2.5 percent variable interest rate.

 

As a consumer, the best option is to have a candid discussion with your mortgage professional to ensure you have a full understanding of the risks and rewards of each type of mortgage.  That is where I can help.  Call me to discuss which type of Mortgage Rate best suits your needs.

 

What is your Risk Tolerence?

 

August 22, 2011

This Week’s Buzz

How to Help Build Your Credit While Saving Money!

 As we all know, good credit is the key not only to getting mortgage financing but also to getting a better interest rate, that in the long run, saves you money.

When circumstances have occurred in your lives that have left you with derogatory credit, in credit proposals or even bankrupt I have solutions for you that will get you back on track. 

Steps that will help you build back your credit rating.  Most importantly, get you in the home you deserve with a mortgage that is affordable and at a good rate!

1. Knowing is half the battle!  This link will give you access to a number of useful articles about credit.  Please use the password ws93a1dk.

*http://www.lenditfinancial.com/creditinformation/index.php?ID=0112

 2. Obtain an Investment Loan for a Guaranteed Investment Certificate (GIC). This loan not only saves you money but reports to the credit bureau too.  The perfect way to rebuild your credit rating.  Please visit the link below using the password ws93a1dk. 

*http://www.lenditfinancial.com/loan-products.php?referid=0112

 

  3. Finally, speak with a licensed mortgage professional who can look at your personal individual circumstances.  It may not always be as bad as it seems and there might be a solution out there for that your bank does not have access too. 

 *All of the above resources are provided free of charge and with no obligation by Lendit Financial.  Lendit specializes in providing GIC investment Loans that help people build their credit, while at the same time bettering their financial future.

 Take Action now!  Stop investing in your landlord’s  Mortgage and Start investing in your future!

 

 

August 15, 2011

 This Week’s Buzz

The “Dollars” and “Sense” 

Why a 4 year Fixed Term is better than a 5 Year Fixed Term

1.     Four year rate is the lower of the two interest rates.

2.     By the end of the forth year you will have paid off more Principal and paid less Interest!  Even with a .10 difference in rate between a 4 year and 5 year rate on a $300,000 mortgage amortized over 30 years they will save over $ 5,000.00 in interest payments.  

3.     Finally, when circumstances force you to break your mortgage early, the prepayment penalty of *IRD on a 4 year fixed term mortgage vs a 5 year fixed term mortgage is much lower.  

*IRD (Interest Rate Differecntial) is a penalty that may apply if your clients payoff their mortgage prior to the maturity date. 

 I am sure you will agree that for the most part every four years we make changes in our lives.  We move, we renovate, we want to purchase investment properties, our families grow.

  Having a four year term gives you the perfect opportunity to use the equity available in your home to invest in your future!  

Investing in your Future, one Mortgage Term at a time!

 

 What exactly is a GDS/TDS Ratio?

Are the two standard measures that lenders have relied on to determine one’s ability to pay their mortgage and other debt expenses.

 Gross Debt Service Ratio – GDS

Is the percentage of a person(s) income required to cover or afford, the total payment of a Mortgage including, principal, interest, property taxes, heat and condo fees (if applicable, 50%).  It is calculated using the total monthly gross income divided by the total monthly home expenses as stated above. A maximum allowed GDS for most clients is 30% of the available income.  Some lender’s will waive this maximum if the client’s Fico Score or Beacon score is above the norm.

 Calculated as:                  GDS =  Annual Mortgage Payments + Property Taxes

                                                            Annual Gross Family Income

 

Total Debt Service Ratio – TDS

Is the percentage of a person(s) income required to cover or afford all housing costs (GDS) plus any instalment or credit card debt.  This percentage is calculated as above and includes the monthly payments required for any credit cards, loans, lines of credit, etc.   This is a good indicator to lenders of whether a potential borrower has the ability to cover the proportion of gross income that is already spent on the house as well as the other financial commitments they already have in place.  Typically, the maximum allowed for a GDS is 40% although again, some lenders will go up to as high as 50% TDS depending each individual borrower.

 Calculated as:                    TDS = Annual Mortgage Expenses + Other Debt Payments

Annual Gross Family Income

For example, Mr. and Mrs. Smith have a monthly principal and interest mortgage payment of $1,000 monthly property taxes of $250.00, and monthly credit card and loan payments totalling $500.00.  Their gross family income is $75,000.00. 

 This would give them a GDS 21.6% of  TDS 29.6%. Based on the benchmark of GDS/TDS of 30/40, Mr. and Mrs. Smith appear to be carrying an acceptable amount of debt.

 

VARIABLE VS FIXED – What’s the Scoop!

Dr. Moshe Milevsky of York University has done some extensive research on Fixed vs Variable Rate Mortgages.  The key points of his recently written article are as follows:

 

• Based on data from 1950 to 2007, the average Canadian could expect to save interest of 90.1% of the time by choosing a variable-rate mortgage instead of a fixed.  The average savings was $ 20 630 over 15 years per $100 000 borrowed.
• Variable mortgage typically let people shave over a year off their amortization.
• Always keep in mind that there is not a ‘one-size-fits-all solution’ to choosing a fixed or variable rate. Dr. Milevsky feels it depends on one’s risk tolerance
• Although rates are virtually impossible to predict, the premium of fixed rates over variable rates has declined about 7% in the last seven years

 

Milevsky’s Mortgage research is said to be the best out there.  He has shown time and again that regardless of what rates do in 1 – 2 year periods you are better off in a variable IF you can handle the payment risk of periodic increases and decreases to the actual amount paid to the lender, as the prime rate fluctuates.

 

For more information and to read the published article please visit:

http://www.advisor.ca/images/other/ae/ae_0208_mortgages.pdf