I just finished building a house in NS financed with a variable rate construction progress draw mortgage at Scotiabank. Total loan amount is $405k. We have about $130k in equity (own the land and put additional cash into the project) plus we can out down upto $60k more. I was planning to target a conventional mortgage of about $350k.
I am ready to enter negotiations to roll into a fixed rate mortgage. If I stick with ScotiaBank, they'll waive any prepayment fees (3 months interest, ~$4500) to close the existing mortgage.
The problem is Scotia's published closed fixed rates are quite high. We built this house with the intention of staying long term. I had always considered a long fixed rate mortgage given the recent trend for rate hikes.
I called Tangerine and they will hold a 10yr @ 3.79 or a 5yr @ 3.34. Scotia's rates are 6.39 & 5.14 respectively. If I take the hit and leave Scotia the payback period would be <1 yr for the 10yr fixed and about 16mos for the 5yr. That is if Scotia only offers the published rates. Perhaps they will come down? I meet with them later today so I will find out.
After browsing around this forum and others I'm starting to get the impression that long fixed rate mortgages are not necessarily the best move, even in today's climate.
Other option is to go with a short term (e.g. 3 yr) term with ScotiaBank then have some negotiating position at the end of the term and take advantage of annual prepayment privileges. I certainly can't guess what's going to happen with mortgage rates given the uncertainty with NAFTA, oil prices but BOCs recent moves point to increases.
Anyway thanks for reading and I woul appreciate any thoughts or advice.