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When shopping for a mortgage most of us would be interested in just securing the lowest rate while others may be keen in the lowest payment. The difference is that the lowest rate (ie 5 year fixed closed term at 2.99%) has blended payments of both interest and principal, while an interest only payment may very well have the lowest payment, but there is absolutely no requirement to pay down any principal.  The actual cost to you is actually more as most line of credit rates today are at Prime plus 0.50% (3.50%) or higher. In addition, a fixed rate of 2.99% will give you peace of mind of not only securing a great rate for the next 5 years but also knowing what your monthly obligation is to the penny and being able to calculate the remaining balance owing after the term is up (can your line of credit do that?!).

There are often many other variables in life and unexpected turn of events that can take place so the opportunity to have some structure to your financial affairs, in this case your mortgage, may be a better choice for you. Rates for long term mortgages have recently been at all time lows and now we notice are slowly on the rise with most lenders. Rates for a 5 year fixed closed term have been as low as 2.89% but, sadly, are no longer available today. Perhaps we will the see the return to the lowest rates ever but keep in mind that, historically, rates have been much higher in the past. Just 5 years ago ago today some of our best lenders’ lowest rates were 5.74% for a 5 year fixed closed term! Those who have recently renewed or are now or soon renewing their 5 year mortgage term with their lender must be breathing some sigh of relief for sure.

Deciding what’s best for your own situation (ie should you lock in , stay variable, or continue with a line of credit) is important to discuss with an Accredited Mortgage Professional that can provide you with the options available to you in order for you to make an informed decision. Why not give us a call today for a “no obligation” review of your financial situation at absolutely no cost to you. We look forward crunching out the numbers for you and sharing with you the many options to consider. Whether or not a 5 year fixed closed term is right for you will be a decision you can make with the information we provide you with.