Don't Lose Sleep Over Your Mortgage

Has the 'variable/fixed' debate -and the threat of rising interest rates - kept you awake at night lately? If so, you're not alone.


Approximately 33 per cent of homeowners have complained that they lost sleep due stress associated with their mortgage, according to a new BMO survey conducted by Harris-Decima.

The Harris/Decima online poll was conducted from February 16th to 22nd, 2010 and is based on a sample of 1,000 Canadians between the ages of 25-45 years, who are either current home owners (who currently have a mortgage on their home) or are planning on purchasing their first home in the next 12 months, and at least share in their household's financial decisions.

If you're thinking about buying a new home - or if you're thinking about renewing your mortgage - I can't stress enough how important it is to get preapproved. While rates are likely going to be rising over the next year, a preapproval allows you to lock into today's low rates for 120 days. If rates go down, you still benefit from the lower rate.

In terms of the fixed/variable debate, many experts predict Prime will rise to 1.25% by the end of the year, compared to 0.25% today. To determine whether you should lock in or not, it's important to do the math ahead of time and determine how much of an influx you can comfortably withstand.

Remember that when you lock in, you're taking the rate of the current five-year fixed mortgage, so it's best to keep an eye on those as well if you're getting close to your threshold.

Variable rates increase in accordance with the Bank of Canada's prescheduled Prime rate announcements - so a hike isn't going to come out of the blue. Fixed rates, however, fluctuate with the bond market which is much less predictable.

Don't lose sleep over this. Instead, give me a call. I can assist you with a preapproval or analyze your financial situation and help you make the decision that is right for your specific needs.