Help deciding between two mortgages:
Hi all, maybe you guys can have a look and give me some advice:
Given: Condo in a very desirable location, market value ~400K , can easily rent it out for 1700 or so plus 150 for parking = 1850$
Two mortgage offers on early renewal: 4-yr fixed 2.77 ; 5-yr variable 2.50%
Current mortgage rate is high: 3.79% - so early renewal saves a decent chunk of cash, current mortgage balance $260K
Dilemma & Consideration:
1) Still need to live in this condo until either September 2015 or September 2016.
2) If I move out on one of the above dates - can either break mortgage and sell or rent it out, if rent out can breakeven if reduce mortgage payment and still get about 9K of principal paid off per year.
3) If move out and sell : breaking variable mortgage the penalty is not that bad - few grand, for fixed rate - the IRD penalty would be over 10K
4) Variable vs. Fixed - obviously at the rates above, it would take 1 rate hike to match the fixed and variable rate.
Discuss
Thank you.
Given: Condo in a very desirable location, market value ~400K , can easily rent it out for 1700 or so plus 150 for parking = 1850$
Two mortgage offers on early renewal: 4-yr fixed 2.77 ; 5-yr variable 2.50%
Current mortgage rate is high: 3.79% - so early renewal saves a decent chunk of cash, current mortgage balance $260K
Dilemma & Consideration:
1) Still need to live in this condo until either September 2015 or September 2016.
2) If I move out on one of the above dates - can either break mortgage and sell or rent it out, if rent out can breakeven if reduce mortgage payment and still get about 9K of principal paid off per year.
3) If move out and sell : breaking variable mortgage the penalty is not that bad - few grand, for fixed rate - the IRD penalty would be over 10K
4) Variable vs. Fixed - obviously at the rates above, it would take 1 rate hike to match the fixed and variable rate.
Discuss
Thank you.