What a splendid article! Thanks for the sharing. Waiting for your updating constantly.

(:

All I gotta say is DAMN those are some cheap rates!

I'd just go for the 3 year fixed. No points?

It really depends on your comfort level. CanEquity has a nice graph comparing the prime rate and 5 year fixed rate over the past 10 years. The prime rate can move much more than 1% in 3 years.

I have to say that with a fixed term, you can blend and extend easily without breaking it and paying fees. Understand what your options are with the variable rate. Do you get a fixed discount on converting to a fixed term? What's the cost for breaking it?

I picked a 3 year term when I bought my first place. There are so many expenses to incur in the first year and if your finances are tight, any increase in payment due to rate increase may be felt. For example, will the family grow? Variable rates only seem to offer 5 year terms but I am against long term rates. 3 year is the max I have had. It's easier to take advantage of market dip by doing a blend and extend at any point. I'll spare the details but I wrote about it on my blog. It's all about the savings that a lower interest has on your amortization now! Rather than feeling safe.

Use a mortgage calculator to test scenarios. There are plenty of free ones on the web and at the banks. Run the different scenarios. I agree with you that the amortization is a good way to evaluate where you land. With either choice, keep on monitoring the rates and adjusting course. I started with a 25 year term and after 5 years I have just under 14 years left. Making bi-weekly payment is big on amortization. Then I just happen to be able to reduce my rate while keeping the same payment. (Essentially increasing my payments without making the increase).

The Money Gardener had an interesting view on paying his mortgage. Depending on your comfort level and goals, that may be something to consider.

I too, would go with the 3-year rate. Can rates really stay this low...? I'm thinking no. If you get your 3.15, and rates go up 1% over the next 3 years of your term, you'd be ahead. This is quite likely. If not, and rates only go up 0.25 or 0.50 basis points, you're still not that far off. With the 3-year term, you don't have to rate-watch and you can focus on more things to invest wisely :)
BTW - is that the future view from your condo? Sweet if so!!

I would go with the 3 year rate and just be careful not to take on too much debt. I believe rates can go up by more than 1% by 2014 but then again if you asked me 6 months ago I would have predicted higher rates than we're seeing today. I believe when rates move higher they are likely to move fast. On the other side of the coin is the possibility of deflation and lower rates over the next couple of years. If this happens then you can jump on the 3 year rate at that point and possibly lock in lower rates for the first 5 years of your mortgage.

Too bad they don't offer 50/50 - half variable, half fixed.

The key I think is to ask if you can afford your payment if the rate goes as high as 5 - 6%! You are in a really good environment to take on a mortgage at low rates. I assume you got a great price on your condominium as well. If you were in the U.S. I would recommend a 30 year mortgage and just be done with it!

What a splendid article! Thanks for the sharing. Waiting for your updating constantly.

(:

Anyone else thinking of re-financing the mortgage at the new low rates this morning? I'm seeing some 5.30 APRs for 30yr fixed w/ 0 points.

All I gotta say is DAMN those are some cheap rates!

I'd just go for the 3 year fixed. No points?

I always vote fixed rate...I like the peace of mind.

I vote for fixed rate- no more than a 20 year loan at max. 15 year is better if you can do the payment. A 15 year loans saves you tons of money over time.

It really depends on your comfort level. CanEquity has a nice graph comparing the prime rate and 5 year fixed rate over the past 10 years. The prime rate can move much more than 1% in 3 years.

I have to say that with a fixed term, you can blend and extend easily without breaking it and paying fees. Understand what your options are with the variable rate. Do you get a fixed discount on converting to a fixed term? What's the cost for breaking it?

I picked a 3 year term when I bought my first place. There are so many expenses to incur in the first year and if your finances are tight, any increase in payment due to rate increase may be felt. For example, will the family grow? Variable rates only seem to offer 5 year terms but I am against long term rates. 3 year is the max I have had. It's easier to take advantage of market dip by doing a blend and extend at any point. I'll spare the details but I wrote about it on my blog. It's all about the savings that a lower interest has on your amortization now! Rather than feeling safe.

Use a mortgage calculator to test scenarios. There are plenty of free ones on the web and at the banks. Run the different scenarios. I agree with you that the amortization is a good way to evaluate where you land. With either choice, keep on monitoring the rates and adjusting course. I started with a 25 year term and after 5 years I have just under 14 years left. Making bi-weekly payment is big on amortization. Then I just happen to be able to reduce my rate while keeping the same payment. (Essentially increasing my payments without making the increase).

The Money Gardener had an interesting view on paying his mortgage. Depending on your comfort level and goals, that may be something to consider.

I too, would go with the 3-year rate. Can rates really stay this low...? I'm thinking no. If you get your 3.15, and rates go up 1% over the next 3 years of your term, you'd be ahead. This is quite likely. If not, and rates only go up 0.25 or 0.50 basis points, you're still not that far off. With the 3-year term, you don't have to rate-watch and you can focus on more things to invest wisely :)
BTW - is that the future view from your condo? Sweet if so!!

Kevin, If you are going to be in the home for more than a few years, go for a fixed for the term of 15-30 years. (Or consider a variable with a fixed term of 8-10 years). With interest rates at 50 year lows, the chance to lock in low mortgages rates for a longer term is GOLD. Congrats and good luck, Barb

Kevin,

You can always split the mortgage into variable and fixed parts. Also remember that you will have to pay the piper once refinancing is up so if you can go with a variable rate conditional to paying lump sum payments for the next 3 years you will come out ahead no matter what the rates do in the next 3 years!

Good luck with your decision :)

I would go with the 3 year rate and just be careful not to take on too much debt. I believe rates can go up by more than 1% by 2014 but then again if you asked me 6 months ago I would have predicted higher rates than we're seeing today. I believe when rates move higher they are likely to move fast. On the other side of the coin is the possibility of deflation and lower rates over the next couple of years. If this happens then you can jump on the 3 year rate at that point and possibly lock in lower rates for the first 5 years of your mortgage.

Too bad they don't offer 50/50 - half variable, half fixed.

The key I think is to ask if you can afford your payment if the rate goes as high as 5 - 6%! You are in a really good environment to take on a mortgage at low rates. I assume you got a great price on your condominium as well. If you were in the U.S. I would recommend a 30 year mortgage and just be done with it!