Don’t handcuff your mortgage

June 16, 2009

Below is a Financial Post article by Garry Marr, published: Friday, June 12, 2009.

Would you like to pay an extra $300 per month on your mortgage? Not likely.

That hasn’t stopped a number of Canadians, with the deal of a lifetime on a variable-rate mortgage, from switching over to a more expensive fixed-rate product and paying the extra freight.

A fear of rising rates is driving the rash decision. But if you’ve finally managed to pin your banker to the ground, why on Earth would you let him off the mat?

More than 28% of Canadians have a variable-rate product tied to prime, according to the Canadian Association of Accredited Mortgage Professionals (CAAMP). If you negotiated a deal before October of last year, chances are you are now borrowing money for as little as 1.35%. That’s based on deals that at one point saw the banks giving 90 basis points off prime. Prime is now 2.25%.

Read the full article here.

New 50/50 mortgage

Merix Financial and TMG have launched a brand new hybrid called the 50/50 “Wise” Mortgage.  It lets borrowers lock in 1/2 of their mortgage at a 5-year fixed rate and 1/2 at a 5-year variable rate.  The effective combined rate is 3.38% as of today.

Hybrid mortgages offer interest rate diversification that may be suitable for some home owners. When it is difficult for a borrower to choose a fixed or variable rate mortgage, choosing a hybrid mortgage may be the answer to some borrowers:

Some experts think hybrids are a great idea.  Dr. Moshe Milevsky, a prominent mortgage researcher, in the past said that “People should strongly consider mortgages that are part fixed and part floating.”

For more info on 50/50 mortgage, follow this link here.

Kindly contact me (Elsie Tse) at 604-716-3369 or Email Me 

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