News from Canada's Mortgage Experts

A young couple emailed us on the show last week but didn’t get thru on air. When I followed up with directly, they wanted to know whether to go with a fixed or variable rate mortgage in today’s environment. They just purchased their first home, had a 10% down payment and made better than average income. What we advise clients in these types of scenarios is the need to have a mortgage plan. With historically low mortgage rates this couple should aim to pay down their mortgage fast and becoming debt free sooner. In this scenario, we devised a plan for the clients that would see them take the variable rate mortgage (2.65% today) but because of their higher than average income, we recommended that their payments reflect an interest rate of 6%. This way, assuming rates climb back up to that level in the future, they will find themselves in a comfortable cash flow position, having made additional payments to their mortgage because they opted to go variable and significantly ahead of the game in becoming mortgage free.