I HATE Mortgage Renewal Time...

QM · 12-15-2011, 04:42 PM

I'll be honest...I HATE mortgage renewal time. Am I the only one? I do the research and money-handing (which is probably for the better

); DH stays out of it. So I'm the one scrambling, worrying, making phone calls to banks, researching...

Should I do fixed or variable?

Should I do 2 year or 5 year?

Should I go with this bank or that bank?

Who REALLY knows WHAT to do?

I hate this! We have about 6 months left on our mortage before we have to renew it. I've started the researching already since the bank our mortgage is with called the other day to say there is 1/2 a year left and what their rates are if we re-sign with them.

Somebody HELP me!

**monkeywrangler71** · 12-15-2011, 05:06 PM

Rates are down, you should be happy that it's renewal time!

We're saving a ton with the variable rate mortgage, and statistically most people will come out ahead with variable. But you have to be okay with knowing that it might some day go up. There's no sign that that is going to happen anytime soon, and even if it does, the Bank of Canada is extremely conservative about raising rates. They'll need to put them up at some point because inflation is above their target rate, but international economic pressure is keeping them down. Typically the spread between fixed and variable is big enough that rates would have to go up about 3 times before the variable rate is as high as the fixed would have been.

You can also split the mortgage and do half fixed and half variable, if you can't decide.

Start with the bank that you're already with, there could be legal fees if you switch - although some banks will pay them for you. The rates typically don't vary much between banks, and you have to ask them for a rate, not rely on the posted rate.

**monkeywrangler71** · 12-15-2011, 05:09 PM

If it's not up for another 6 months there's not much sense researching too much yet. BoC has 4 rate announcements scheduled between now and then.

And you'll probably want to go 5 year, unless you expect to come into enough money to pay it off before then, or if you are planning to move.

**frugalwarrior2** · 12-15-2011, 06:57 PM

?? don't know we have had a fixed 15 year rate and are in the last 2 years. I just wish a $20.000 lump from heaven would drop at my feet. I got college cost now!

**Greebo** · 12-16-2011, 08:12 AM

Well if you go with fixed you eliminate the whole problem, and since rates are as low as they're ever likely to get, going fixed means your rate will never go up - unlike with variable.

**monkeywrangler71** · 12-16-2011, 09:57 AM

Originally Posted by Greebo

Well if you go with fixed you eliminate the whole problem, and since rates are as low as they're ever likely to get, going fixed means your rate will never go up - unlike with variable.

Canadians don't set their interest for the life of the mortgage like Americans. Her rate will go up when it comes up for renewal next time.

We have a split mortgage, 3.64% on the fixed portion and 2.5% on the variable. We pay about $50 more per month in interest on the fixed. The higher the spread between variable and fixed, the greater the benefit. It really depends on what rates are offered when she renews. If the spread is tight then it may only be a small premium to go fixed, the larger the spread the more the savings start to outweigh the risks.

Statistically speaking, people with variable rate mortgages almost always come out ahead. (source: http://www.advisor.ca/images/other/a..._mortgages.pdf )
But, like everything else, each individual needs to make a decision that reflects their personal risk profile.

**Greebo** · 12-16-2011, 10:45 AM

OH I missed the whole Canada thing.

You crazy Canucks!

QM · 12-16-2011, 08:35 PM

MonkeyWrangler - Does that mean your intererest rate is 6.14%...if it's 3.64% on the fixed portion and 2.5% on the variable? How many years left on your mortgage before you renew?

QM · 12-16-2011, 08:35 PM

Originally Posted by Greebo

You crazy Canucks!

I never knew why we were called "Canucks"...until I googled it right now!

**monkeywrangler71** · 12-17-2011, 11:15 AM

Originally Posted by QM

MonkeyWrangler - Does that mean your intererest rate is 6.14%...if it's 3.64% on the fixed portion and 2.5% on the variable? How many years left on your mortgage before you renew?

No, the average would be 3.07%. It is essentially two separate loans, each for half of the total borrowed. For example, if we took out $100 we would have borrowed $50 at 3.64 and $50 at 2.5.

I kind of like having two smaller loans rather than one big one. I'm working on paying one off first and it feels more obtainable somehow.

**Greebo** · 12-19-2011, 08:49 AM

Originally Posted by QM

I never knew why we were called "Canucks"...until I googled it right now!

Heck, I still don't know why...

QM · 12-20-2011, 05:10 PM

Originally Posted by monkeywrangler71

No, the average would be 3.07%. It is essentially two separate loans, each for half of the total borrowed. For example, if we took out $100 we would have borrowed $50 at 3.64 and $50 at 2.5.

I kind of like having two smaller loans rather than one big one. I'm working on paying one off first and it feels more obtainable somehow.

I'm working with the bank we're currently at asking trying them to give us 3.19% or better to match Bank of Montreal's current "special" rate for their 4-year term. (See Mortgage rates Canada | Mortgages | BMO Bank of Montreal) I'm hoping they'll match or do better because if they come back and say 'yes', then I plan to lock into the 4-year. If all goes as planned (with us doing the prepayments on our mortgage that we're currently doing), then we'll have the mortgage paid off in a little over 4 years. Woohoo! It's SO hard not to count my chickens before they're hatched, but I look at it as seeing light at the end of the tunnel.