Fixed vs Variable
With a healthy spread again between fixed and variable many more are looking again
at the variable as a great option for their mortgage.
Variable mortgages offer great flexibility for clients that want to take advantage of
today’s low rates and pay down their mortgage faster.
Take a look at the two scenarios below – one Fixed and the other Variable (with
variable assuming a .25 increase in prime annually). Although we can’t predict what
will happen with prime, we’ve seen it at a record low for a record amount of time, all
indicators seem to be it will be around for a little while longer.
In the end, the two scenarios look very similar with about a $1500 difference in your
final mortgage balance in favour of the variable.
Is your client savvy with a goal to pay down faster and have flexibility in their budget?
Food for Thought:
· What would the numbers below look like if on the variable mortgage you paid it
at the 5 year fixed rate payment?
· What would those numbers look like if you utilized your 20/20 privileges?
· Lump sum payment can be made any time throughout the year along with any
payment in minimum increments of $100
· What if Prime doesn’t change for the first few years? Your saving will be that
much greater!
