-A Variable rate mortgage outperforms a fixed rate mortgage in over 88% of the time… According the Milevsky study done earlier this decade and updated in 2008….
-Variable rate mortgages have been at least 1.00% lower than the 5 year fixed rate mortgage over the past 25 years….and on occasion, better by as much as 2.00%.
-Canadians move every 3 years on average…meaning they must either refinance their mortgage or pay it out.
-a Variable rate mortgage has a fixed penalty of 3 months interest.
-a 5 year fixed rate mortgage has a penalty that is at least 3 months interest but has no limit…. and in the past 18 months, we have seen penalties of 6, 10 and even 14 months worth of interest.
-yet, 66% of Canadians have a 5 year fixed rate mortgage…
Is the 5 year fixed rate mortgage really the right product for 66% of Canadians? Can the 5 year fixed rate mortgage be the right product for everyone? Which mortgage product do you think your bank wants you to choose?
By the way, can you guess which mortgage product is the most profitable?…. you guessed it.. the 5 year fixed rate.
Make sure your Mortgage Broker does a needs analysis before they recommend a mortgage product for you…. There is no ‘one size fits all’ when it comes to mortgages…. Ask yourself, ‘who is this mortgage best for’…. my bank or me?