Would you choose a 10 year fixed rate mortage?
You are a very lively and informative lot of people here on the Personal Finance forum. I have been going back and forth trying to determine my best option for financing my new condo townhouse purchase. I will be carrying a mortgage of approx $368000 after putting the 20% DP on the new property which I purchased for $459900 in downtown Toronto. I'm not a first-timer - this is actually my 3rd property and the 2nd condo I have purchased and lived in solo. My current mortgage is the ManulifeOne which I obtained in 2010 when I decided to take advantage of the equity in my condo and cover losses I incurred to help out a family member.
While I enjoyed the appearance of flexibility with ManulifeOne, I know I wasn't using the HELOC mortgage to its potential. My new property is significantly more than my current home and while I can afford to carry these higher costs (I do not maintain a credit card balance, do not own/lease a vehicle, no other loans or LOC outstanding), I was considering a HELOC mortgage product from a different lender where I would divide the balance into different fixed terms. I wanted to be able to borrow from the equity in the event I'm assessed by the condo corp for major improvements.
Now that I have been obsessively reading this forum and other similar personal finance blogs, I am concerned about interest rates and I may now want to take advantage of a 10 yr fixed term (ex. 3.89%). After closing costs have been considered, I will have approx $35000. I intend to max out my TFSA (I've got $17000 in contribution room), purchase $2000 in RRSPs (to reduce my tax payable to zero and continue to repay my LLP). The remainder will be used to furnish the new and bigger place and I anticipate I will still have a significant amout in high interest savings and add $5000 in my TFSA next year to act as a buffer in the event life throws me a curveball.
My question to you is - given my situation and knowing my intention is to utilize the TFSA, do I even need to rely on a HELOC mortgage to use as a buffer once I begin to pay down more of my principle, or attempt to protect myself from possible high interest rates and look for a 10 yr fixed rate? The old condo/new condo close in early August and I'd like to lock my financing down this week. I was waiting because the HELOC fixed mortgage rates were better if I finalized it within 30 days of closing. I'm leaning toward 10 yr fixed as of the past few days so I would need to lock this down now. Sorry for the length...I'm seeking other opinions to ensure I've thought of everything. Thanks!
While I enjoyed the appearance of flexibility with ManulifeOne, I know I wasn't using the HELOC mortgage to its potential. My new property is significantly more than my current home and while I can afford to carry these higher costs (I do not maintain a credit card balance, do not own/lease a vehicle, no other loans or LOC outstanding), I was considering a HELOC mortgage product from a different lender where I would divide the balance into different fixed terms. I wanted to be able to borrow from the equity in the event I'm assessed by the condo corp for major improvements.
Now that I have been obsessively reading this forum and other similar personal finance blogs, I am concerned about interest rates and I may now want to take advantage of a 10 yr fixed term (ex. 3.89%). After closing costs have been considered, I will have approx $35000. I intend to max out my TFSA (I've got $17000 in contribution room), purchase $2000 in RRSPs (to reduce my tax payable to zero and continue to repay my LLP). The remainder will be used to furnish the new and bigger place and I anticipate I will still have a significant amout in high interest savings and add $5000 in my TFSA next year to act as a buffer in the event life throws me a curveball.
My question to you is - given my situation and knowing my intention is to utilize the TFSA, do I even need to rely on a HELOC mortgage to use as a buffer once I begin to pay down more of my principle, or attempt to protect myself from possible high interest rates and look for a 10 yr fixed rate? The old condo/new condo close in early August and I'd like to lock my financing down this week. I was waiting because the HELOC fixed mortgage rates were better if I finalized it within 30 days of closing. I'm leaning toward 10 yr fixed as of the past few days so I would need to lock this down now. Sorry for the length...I'm seeking other opinions to ensure I've thought of everything. Thanks!