Help which mortgage term to choose

Hi Friends

I have the following mortage approvals for 270K mortgage closing on October 30th.

1 year fixed - 2.05 % (valueland)
5 year variable - P - 0.10 (valueland)
5 Year fixed - 3.64 (CIBC )

Have not tried 2 or 3 year fixed but i heard TD is doing 3 year fixed at 2.9 %. I am not sure what to choose sometime i think get the peace of mind with 5 year fixed sometimes take a chance with 1 year fixed and then see how the market is next year and sometimes go for middle road 2 year or 3 year fixed. Not thinking of variable ar this time becoz we are getting P -0.10 which is likely to get better if prime increases.

Please give me your suggestions for pros and cons of these options. Need to decide in next 1 - 2 days. Thanks for your help.

take the 5-year fixed term. you're not ever going to do much better than that and p-.10 isn't going to seem like such a great deal in 3 years.

what do you think of the option of taking 1 year fixed at 2.05 now and trying my luck next year for better variable or 3 year fixed at 2.9?

I suspect the laxity of monetary supply will only go on for one more year and after that there will be rate increases. 3.6% over 5 years historically is an incredibly low rate and locks in some price certainty for yourself.

If you could have gotten the old prime - 0.75 deals like I got I would be singing a different tune. I am dreading the BoC upping the prime rate because I have made so much unexpected progress in paying off my mortgage. Before the start of the financial crisis I was paying 5.5% on my P-.75 term while my friends who a year earlier locked in 4% were very happy.

the 5 year fixed is the best way to go. It isn't very likely that we will see these low interest rates again, so it is best to take advantage of them while they are low with a fixed rate.
The BoC realizes that property values are increasing because of these low rates, and they cannot keep the rates this low for very long.

wow 3.64 is a great rate 5 year fixed,

what branch?

Originally Posted by jagsjay

wow 3.64 is a great rate 5 year fixed,

what branch?

Agree, I would pick it.
However the OP should be careful and be aware that there will be a hefty penalty, probably a few $grand to break the mortgage before the term is up! Make sure you know that you will actually be there for 5 years!

If you can do a 4 year fixed, there are huge interest hikes projected in 5 years.

I thought that the penalities are common across all banks, is there anything specific i should check in terms and conditions.

Originally Posted by Jucius Maximus

Agree, I would pick it.
However the OP should be careful and be aware that there will be a hefty penalty, probably a few $grand to break the mortgage before the term is up! Make sure you know that you will actually be there for 5 years!

Interest rates should start going up next year i guess any reason why you feel it will be better to renew after 4 years rather than 5 years

Originally Posted by pricerror

If you can do a 4 year fixed, there are huge interest hikes projected in 5 years.

Originally Posted by dealsngh

Hi Friends

I have the following mortage approvals for 270K mortgage closing on October 30th.

1 year fixed - 2.05 % (valueland)
5 year variable - P - 0.10 (valueland)
5 Year fixed - 3.64 (CIBC )

Have not tried 2 or 3 year fixed but i heard TD is doing 3 year fixed at 2.9 %. I am not sure what to choose sometime i think get the peace of mind with 5 year fixed sometimes take a chance with 1 year fixed and then see how the market is next year and sometimes go for middle road 2 year or 3 year fixed. Not thinking of variable ar this time becoz we are getting P -0.10 which is likely to get better if prime increases.

Please give me your suggestions for pros and cons of these options. Need to decide in next 1 - 2 days. Thanks for your help.

Wow, 3.64 for 5 yrs fixed is an amazing rate. Go for it. Nice and predictable for the next five years. Now you can focus on other things.

Originally Posted by takethat200210

Wow, 3.64 for 5 yrs fixed is an amazing rate. Go for it. Nice and predictable for the next five years. Now you can focus on other things.

Yeah, my mortage is up for renewal and TD offered 4.09 - 5yrs fixed so 3.64 is a a great rate.

I'm thinking of taking the 1yr for 2.9 and taking my chances next year -- hope this isn't folly

Originally Posted by Jucius Maximus

Agree, I would pick it.
However the OP should be careful and be aware that there will be a hefty penalty, probably a few $grand to break the mortgage before the term is up! Make sure you know that you will actually be there for 5 years!

There are huge penalties if rates go DOWN, which you seem to advise will RISE. Where is the logic?

Originally Posted by dealsngh

I thought that the penalities are common across all banks, is there anything specific i should check in terms and conditions.

You will get a penalty regardless for a closed mortgage.
That's why say you should get fixed/closed or open/variable.
Never get closed/variable because the market is basically holding your money ransom.

Since you are already getting fixed/closed, you just need to ensure that you understand how the choice will affect your options and ensure that it is consistent with your intentions for the next 5 years.

Originally Posted by squid

There are huge penalties if rates go DOWN, which you seem to advise will RISE. Where is the logic?

What I mean is that there's big penalties if he breaks the mortgage (i.e. sells the home or refinances) before the 5 years are up.