Real Estate

For all those who closed on or after April 2020, how many of you went for variable vs fixed?

  • Last Updated:
  • Feb 14th, 2021 8:45 pm
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Poll: What type of mortgage did you go for?

  • Total votes: 98. You have voted on this poll.
Fixed
 
49
50%
Variable
 
49
50%
[OP]
Deal Addict
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Mar 30, 2010
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Kagaaruk, NU

For all those who closed on or after April 2020, how many of you went for variable vs fixed?

I know there's a separate thread for mortgage rates, but I wanted to do a quick survey focusing on just those that refinanced or got new mortgages on or after April 2020.

Which did you go for, and why?
Last edited by dc200 on Feb 8th, 2021 4:17 pm, edited 1 time in total.
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28 replies
Sr. Member
Apr 29, 2010
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GTA
We got a 5 year variable because it’s cheaper to break and because YOLO
Deal Addict
Oct 27, 2012
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Toronto
Variable. I am going to enjoy almost 40 bps savings compared to a bottom 5 year fixed rate for 30 year AM. There's a non zero chance I will need to break in the next 5 years, so penalty was a huge factor. Fair penalty lender would have lent me a lot less than the big banks.

Also, my outlook is the economy is going to be shit for the next few years. Mortgage rates could go up because of the link to the 5 year yields, but Prime is more tied to the economy as a whole and I see little chance they raise that in the next few years.
[OP]
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Mar 30, 2010
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Kagaaruk, NU
Interested to hear from the people that decided to go for fixed rate.

I see zero advantages going with fixed at this time.
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May 10, 2008
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Vancouver, BC
I went with a fair-penalty monoline lender at 1.44% 5-years fixed for one of my renewals. I kinda just want to renew, forget about it, and move onto something else.

I will probably go about it differently for my next purchase.
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Aug 19, 2005
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York
I just purchased a home and was tempted to go variable but I am just banking on the fact that rates can't go much lower then they are now. Chose fixed to have peace of mind over the first 5 years and the consistent payments. In my case it was 20bps to 15bps difference so I decided to play it safe.
"It's how you deal with failure that determines how you achieve success."
Deal Addict
Feb 4, 2010
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Surprising how many people think only variable is cheaper to break...many don't do their research.
[OP]
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Mar 30, 2010
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Kagaaruk, NU
The Destroyer wrote: I just purchased a home and was tempted to go variable but I am just banking on the fact that rates can't go much lower then they are now. Chose fixed to have peace of mind over the first 5 years and the consistent payments. In my case it was 20bps to 15bps difference so I decided to play it safe.
Yeah I guess if the difference between fixed and variable is so minute then fixed would be preferable.

Still, isn't it going to be more expensive for you to break your mortgage if you're fixed?
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Aug 7, 2007
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GTA
dc200 wrote: Interested to hear from the people that decided to go for fixed rate.

I see zero advantages going with fixed at this time.
Zero advantages?

Fixed is pretty much at all time lows. The variable spread can’t be that much of a difference right now. In this climate, I’d take the 5 year fixed for security.

BoC is not suppose to raise rates until 2023 but that could also change quickly as the economic has bounced back quicker than they anticipated. If you go variable today, you’re taking the risk that rates won’t rise more than the fixed rate of today due to the narrow spread.

I took variable in 2018, when the spread was wide enough, I benefited greatly with the rapid interest rate drops. If I had to make the same decision today, I’d lock in with fixed
Newbie
Sep 21, 2018
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ADRiiAN` wrote: Zero advantages?

Fixed is pretty much at all time lows. The variable spread can’t be that much of a difference right now. In this climate, I’d take the 5 year fixed for security.

BoC is not suppose to raise rates until 2023 but that could also change quickly as the economic has bounced back quicker than they anticipated. If you go variable today, you’re taking the risk that rates won’t rise more than the fixed rate of today due to the narrow spread.

I took variable in 2018, when the spread was wide enough, I benefited greatly with the rapid interest rate drops. If I had to make the same decision today, I’d lock in with fixed
This, I went fixed (the spread wasnt that large anyway) because I see much smaller upside and a LOT greater downside to variable rates in this environment. However, this is only because I bought a forever house and don't anticipate moving in the next 5 years, come hell or highwater. If there was a chance I was going to break, I would probably go variable OR a fixed rate with a fair penalty lender.
Member
Sep 29, 2015
291 posts
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Toronto, ON
Fixed for me last fall. Don’t plan on moving in the next 5 years, and I can see there being a real risk of interest rates coming back in year 4-5.
Sr. Member
Jan 22, 2012
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Bradford
Nothing wrong with fixed if you have no desire to move in the next 5 years. No way rates will stay this low up until 2025. I mean I could be wrong but unlikely.
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May 19, 2008
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hierophant wrote: Surprising how many people think only variable is cheaper to break...many don't do their research.
Care to elaborate on this?
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Feb 4, 2010
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Dk28 wrote: Care to elaborate on this?
You can get a 5 year fixed with a 3-month break penalty (vs IRD)...I have one.
Sr. Member
Jan 22, 2012
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Bradford
hierophant wrote: You can get a 5 year fixed with a 3-month break penalty (vs IRD)...I have one.
Agreed. I have a 5 year fixed with a current penalty of $2580. I’m only 4 months in to the term.
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Oct 27, 2012
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Toronto
hierophant wrote: You can get a 5 year fixed with a 3-month break penalty (vs IRD)...I have one.
Are you sure it isn't the higher of 3 months interest or IRD?

If you just recently got the mortgage and the comparison rate is the current 5 year rate, with a fair penalty lender then I see how it's currently 3 months interest. But say, in 7 months when your comparison rate will be the 4 year term which normally carries, and let's say rates continue to fall, you would likely be looking at paying the IRD. It will sting a lot less than a big bank though with their insidious "discount" on posted rate calculations.

There's no free lunch with a fixed rate.
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Feb 4, 2010
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ozzie16 wrote: Are you sure it isn't the higher of 3 months interest or IRD?

If you just recently got the mortgage and the comparison rate is the current 5 year rate, with a fair penalty lender then I see how it's currently 3 months interest. But say, in 7 months when your comparison rate will be the 4 year term which normally carries, and let's say rates continue to fall, you would likely be looking at paying the IRD. It will sting a lot less than a big bank though with their insidious "discount" on posted rate calculations.

There's no free lunch with a fixed rate.
Yes I'm sure because I made sure I got a mortgage that I could break with a 3 month penalty - I did a lot of research beforehand so I knew what I was getting myself into. You have to ask - otherwise of course they'll give you the one that gives them more $$ should you have to break it.
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Apr 22, 2003
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Toronto
Topher86 wrote: Agreed. I have a 5 year fixed with a current penalty of $2580. I’m only 4 months in to the term.
hierophant wrote: Yes I'm sure because I made sure I got a mortgage that I could break with a 3 month penalty - I did a lot of research beforehand so I knew what I was getting myself into. You have to ask - otherwise of course they'll give you the one that gives them more $$ should you have to break it.
What lenders are you guys with that offer fixed with a 3 month penalty?
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Jan 27, 2004
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T.O. Lotto Captain
Topher86 wrote: Nothing wrong with fixed if you have no desire to move in the next 5 years. No way rates will stay this low up until 2025. I mean I could be wrong but unlikely.
I can see rates staying low until the economy is booming. Then slow rise. Tiny ones.
Sr. Member
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May 10, 2008
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Vancouver, BC
Pyro wrote: What lenders are you guys with that offer fixed with a 3 month penalty?
Yes, I would like to know as well. It was mentioned in another thread awhile back but nobody ended up disclosing which lender or mortgage product this is.

Could someone please clarify this once and for all??

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