Question:

am currently at 7.35 and am shopping to transfer mortgage to higher amount (consolidating some debt) and am unsure as to variable versus closed rate. have never used variable before and am wondering what you base your long term considerations on, i don't have a lot of room for risk but am able to secure a variable unprotected 5 year at prime - 0.75 versus 5 yr closed at 4.85 versus 10 yr at 5.81 and am getting more confused at the options please advise thanks l. moore

Answer:

The first thing you will have to verify in writing is the penalty involved in breaking your existing mortgage. Don't take verbal quotes from your lender as these often get escalated in the final statement sent to your lawyer. If you are not prepared to take risks with your mortgage rate, then do not consider the variable rate option. For the last twenty years, the variable rate option has been the smart way to go but if you believe rates have bottomed out, a fixed rate may be better for you. You can re-mortgage your home up to 90% of its value today at 4.9% (May 2, 2004) fixed five year or if you want to try a variable rate we have lenders as low as prime minus .75% (3.75% minus .75% = 3.0%)for five years as well. That variable rate fluctuates monthly. If you need more information, I can be reached at (613) 721-0010, my direct line during the day. John Lozinski

Answered By: John Lozinski

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