Tip #1: Don’t let the fear and the noise surrounding us these days make you rush into locking a 5 year fixed rate mortgage.

As you may have heard us say many times, variable rates mortgages have a lot of advantages for investors. Variable rate mortgages are usually much easier and cheaper to break, and therefore offer flexibility real estate investors need. Fixed rate mortgages on the other hand tend to be more costly to break. So really watch the fine print before you make any commitments. Don’t assume the savings are a slam dunk either, even after today’s announcement, fixed rates mortgages are still around 2.0% higher than variable rates on average (this is guaranteed to change in the next few days, and there is a difference between lenders, but for now we are using 2% for quick math). Think of this 2% as the premium the bank is charging you to insure against the risk of higher interest rates. It also means variable rates need to go higher by another 2% before locking in starts to make sense, and not only that, but that rates will NOT come down back during the remaining term of your fixed rate mortgage (usually 5 years). I offer you no forecasts or guarantees, but all I can say, the pure odds are in your favour to save money if you stick with variable. If you are very concerned and rates are really keeping you up at night, lock into a shorter term fixed rate mortgage, such as 1 or 2 years.

You Might Be Interested In...

Adapt and Thrive Expert Interview - (4)
Adapt and thrive

How to turn a $310 negative cash flow property to a positive $2400 per month using this one strategy

Adapt and Thrive Expert Interview - Rob McLister
Adapt and thrive

Adapt & Thrive: Expert Interview with Rob McLister

Adapt and Thrive: what is the trigger rate?
Adapt and thrive

Adapt and Thrive Tips: What is the trigger rate and how to manage it?

Share this post with your friends