Personal Finance

5-year var or 3-year var open?

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  • Jun 28th, 2005 12:36 pm
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[OP]
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Jun 4, 2005
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5-year var or 3-year var open?

I've been shopping for mortgage for a while. And now I think I need some advices from you guys. These are what the banks offered me:

- 5-year var with ING (prime - 0.75%) (i'm not sure if it's open or close)
- 3-year var open with HSBC (prime - 0.8%)

I've know BMO offers prime -0.85% now, however my closing is after Sept. 30. I'm not able to apply for that. So, back to my question. Which one is better? I would choose ING because it offers lower interest rate. On the other hand, the 3-year var open sounds better because I don't have to stay with it for too long. Tell me what you think. Or, if you have better offer, please share with us :cheesygri Thanks!!
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Deal Fanatic
Oct 25, 2002
6849 posts
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Maple Ridge, BC
Which bank is picking up some/all of your legal and appraisal fees?
Member
Jan 18, 2005
353 posts
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quigon wrote: - 5-year var with ING (prime - 0.75%) (i'm not sure if it's open or close)
- 3-year var open with HSBC (prime - 0.8%)
The ING var is closed.

It really depends what you're looking for in a mortgage. If you're one to worry, stick with a closed 5 year mortgage. It gives you the insurance of knowing exactly what your payments are and how much is going towards interest/principal.

However, a variable mortgage is the best one to go with if you can go without the "rate security".
The 3 year open variable is hard to beat. It gives you the most flexibility, in case you sell, as well as the ability to make extra payments, all w/o penalty.
[OP]
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Jun 4, 2005
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PurpleTiger wrote:The ING var is closed.

It really depends what you're looking for in a mortgage. If you're one to worry, stick with a closed 5 year mortgage.
Thanks for pointing out ING var is closed.
PurpleTiger wrote: The 3 year open variable is hard to beat. It gives you the most flexibility, in case you sell, as well as the ability to make extra payments, all w/o penalty.
ING 5-year var also has 25/25 prepayment while HSBC only has 20/20. Also, ING allows you to convert it to fixed rate term of 3 years or more without penalty at any time. So, my question was which one will benefit me the most? 5-year var or 3-year var(0.05% higher than the 5-year var).
Member
Jan 18, 2005
353 posts
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quigon wrote: ING 5-year var also has 25/25 prepayment while HSBC only has 20/20. Also, ING allows you to convert it to fixed rate term of 3 years or more without penalty at any time.
So the HSBC "open" variable rate mortgage isn't really open at all, if you can only pre-pay a specified amount.

Personally, I would get a true open variable mortgage, like BMO (3-year Open Variable Rate mortgage, currently at 3.4%).
quigon wrote: So, my question was which one will benefit me the most? 5-year var or 3-year var(0.05% higher than the 5-year var).
That will depend on what sort of benefits are you looking for in a mortgage?
[OP]
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Jun 4, 2005
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mroosman wrote:JUst go for the BMO VAR AT .85 OFF
I can't go for BMO 3-year var (prime-0.85%) as my house is closing after September 30 ( you can only apply for this offer if the house's closing date is before September 30) :cry:
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Jan 18, 2005
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quigon wrote:I can't go for BMO 3-year var (prime-0.85%) as my house is closing after September 30 ( you can only apply for this offer if the house's closing date is before September 30) :cry:
Have you called them up to enquire? Doesn't hurt to try...they're probably eager for the business.
[OP]
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Jun 4, 2005
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PurpleTiger wrote:Have you called them up to enquire? Doesn't hurt to try...they're probably eager for the business.
I physically went to BMO and talked to the lady. I guess she didn't want my business. I also asked her about 5-year fixed. I asked her whether she could match ING rates (4.5%). She said "NO" right away without even think about it. While over at HSBC, the lady told me she can offer 5-year fixed @ 4.2% without me mentioning ING's rate.

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