Fixed or Arm Mortgages

[disneysteve]

Originally Posted by LivingAlmostLarge

LOL. But you can't explain that to someone whose had lower rates at 3% or lower and had rates at 12%. She's just from a different culture and can't get it. It's not worth arguing, I already tried. She said it costs more to pay 6%, plus mortgages up there typically last 15 years.

Very interesting. I never knew Canada didn't do fixed rate loans. So what does she think of the new 40 and 50 year mortgages? I think they're insane. I'm sure she does too.

[LivingAlmostLarge]

Yep, they can have loans as long as 10 or 12 years fixed, but those rates are never favorable. The most favorable rates are for a 5 year fixed period then you renegotiate. She thought it was crazy to pay to refinance. And that mortgages take 30 years? She was like you wait until the rate is low and pay it off faster. I told her that would be great, but it doesn't work like that if you negotiated 6% for 30 years, even if you pay it in 15 you still pay 6%. She was upset.

But Canadians also don't write off mortgages, have socialized health care, and retirement from the government. So they just are in a different place. Explaining why we save so much for retirement sounds nutters to her, but then they pay a lot more in taxes for lower income brackets!

[disneysteve]

Originally Posted by LivingAlmostLarge

She was like you wait until the rate is low and pay it off faster.

What are mortgage rates like currently in Canada?

[LivingAlmostLarge]

I have no idea currently but a friend has a 5 year rate from last year for 3.5%. Fixed for another 4 years, so another renegotiation she tells me for 3 years and they are done with their mortgage in 13 years.

[Daylily]

Fixed for me!
We started off at 7% on a 30-year.
After 3.5 years we refinanced to 5.625% for 15-years and we've been on that for another 3.5 years. It ended up shaving about 100k off the total interest.
I want to own my home outright and not owe anything to anyone.