There are two types of mortgages.  Both involve a component of risk.  One is the risk of movement upward, the other risk is that you’ve locked in and now they’re coming down. (here’s where that crystal ball would have come in handy!). 

When you are in the market for a product such as a Mortgage, you need to ask yourself what YOU will be comfortable with.  Losing sleep over your mortgage has a price tag as well, and if having the security of knowing what you have is not changing while you sleep works, then that’s the one for you.  Your co-worker, or friend might have a different opinion about the market, or a stronger stomach!  It is truly an individual choice, and even advice from the best sources might not be right for you.

The lenders have tried to offer products to keep both types of buyers happy:  Capped rate variables, mortgages that are convertible to longer terms, or open into fixed, etc.  They’ve tried to take the guesswork out of the rate game for the homeowner in response to the uncertainty.  And the mortgage specialist you deal with should question you about your personal financial situation along with your risk tolerance.  What might seem like an attractive offer, might not be the right mortgage for you in the long run. 

Canadian homeowners have had an opportunity to experience some of the lowest rates in history, and if you look at a graph of this history, you’ll get a good picture of how fortunate we are.  Not knowing where we will be in the future is why this decision to lock in, or float with prime is so difficult.  The good new is, when you are making this choice, it is often in increments of five years or less at a time, and that’s something most of us can live with.  Be in touch with a mortgage professional who can be available during the life of your mortgage to help you manage this risk and to choose the product that is customized to your personal situation.  


Jacqui Mulikow is a Professional Mortgage Agent with Mortgage Intelligence http://www.mortgageintelligence.ca/jacquimulikow