Not All Variable Rates are the Same.

Choosing the mortgage that's right for you involves a little bit more than merely deciding whether you're a fixed or variable type of person - particularly if you opt for a variable rate mortgage.

It's not enough to choose a variable rate mortgage based solely on rate - you also have to consider what type of variable rate you'd prefer. Below is a breakdown of the most common types:

1. Adjustable Rate Mortgage
An Adjustable Rate Mortgage, otherwise known as an ARM, will see your mortgage payments adjust with every Bank of Canada announcement that causes the Prime rate to increase or decrease. Some lenders will change your mortgage payment immediately, while others - like ING Direct - will evaluate it every three months.
2. Standard Variable Rate Mortgage
A Standard VRM will allow you to maintain the same monthly payment throughout your mortgage term, but the percentage of that payment that goes towards interest will change according to the Bank of Canada's prime rate.
 3. Capped Variable Rate Mortgage
A Capped VRM comes with a built-in limit as to how high your mortgage payment can go within a given term (usually the cap is equivalent to the 5-year fixed rate at the time of signing). While your interest rate may change on a monthly basis, your payment remains the same. If interest rates rise above the capped rate, your mortgage payment won't change.
Each type of variable rate mortgage comes with its list of pros and cons, so it's important to ask a lot of questions and make sure you understand each product before signing on the dotted line. Remember, we're here to help - so ask away!
 

Things to think about when investing

The real estate market can be a lucrative investment tool if you play it right. The thing is, finding a successful investment property is quite a bit different than finding a primary residence. Below are a few things to consider when hunting down a stellar investment property:

1. Put yourself aside.
When searching for a primary residence, you're looking at each home as a place where you could potentially envision yourself living. When searching for an investment property, you're looking at it through the eyes of a business person. Don't get your two personas mixed up. The components that make a good investment property are quite different from those that make a good primary residence.
2. Find an up-and-coming market.
While established, highly-coveted areas will likely attract plenty of rental demand, they are more than likely also highly priced - which means it will be difficult, if not next to impossible, to generate positive cash flow from your rental property. Seek out smaller areas where homes come with smaller price tags but where you're able to charge a high enough rent to balance your books. A low rental vacancy rate is also a good sign that you won't have difficulty finding tenants for your property.
3. Pay attention to local economic factors.
To make sure that your prospective area is a lucrative one, take a moment to look beyond the real estate market. You want to find a place that has a growing population, is generating new jobs year after year, and where wages have either remained flat or increased over the last few years.
4. Think like a tenant.
While it's true that you won't be living in this property, someone will be. And, in all likelihood, they'll value things like proximity to schools, highways and public transportation. Keep an eye out for proposed improvements to a specific area - if the government is setting up to improve public transit, or if a new factory is going to be built a few blocks away, your property will likely be more in demand, and worth more money down the road.