Open vs closed mortgages

[Island Dude]

I would like to ask your opinion on this controversial subject of fixed term vs floating mortgage rates. There seems to be a lot of buzz right now about rising interest rates and whether you should fix your rate either short or long term. Any suggestions?

 

[Restless]

There's no simple answer to that question. Interest rates have probably hit a low that we won't see again for many years. There is only one direction for them to move. On the other hand you start with a lower % when you choose a floating rate.

What is your tolerance for higher rates?

If they rise steeply are you in trouble?

Do you sleep well at night or do you worry about your finances?

Only you can choose the type of mortgage that suits you.

 

[MasterRPC]

Personaly I started out on a variable rate, after noticing two rate raises by RBC in their fixed rated I called my mortage broker and had a chat. 45 minutes latter he called to inform Me that First national was going to raise the rates that evening beyond My comfort level. For me it is about knowing what I will pay over a term.
hope it helps . Rates are going up no doubt about it

 

[TheMayor]

what is being discussed here is variable rates mortgages and fixed rate mortgages and the OP had asked about open vs closed mortgages.

My opinion is the only reason to have an open mortgage is if you want the ability to pay off the entire balance at any time without penalty and for the average person obviousley this is not a concern, open mortgages are mostly for home builders, developers, rich people, people waiting to sell another house, etc who only need to borrow the money from the bank for a shortish period until they can pay the funds back in full.

 

[storm rider]

It depends on your situation.The biggest burn is that while the prime rate is near 1% the mortgage rates the banks offer has barely dropped during the financial crisis.I signed a fixed mortgage 4 years ago at 4.95% and this was well before the financial crisis and when the prime rate was much higher than it is now.Currently the banks are offering rates just a bit lower and in some cases higher than what I got 4 years ago,and rates are on the rise.Even though the Bank of Canada has not started to raise the prime rate both RBC and BNS have raised their rates.If you are going to get a new mortage my best adice for either fixed or variable rate is to go through a mortgage broker as you will get a better rate than a bank will offer you.

SR