Fixed vs variable

We are pleased to introduce Brian Mason as a guest blogger. Brian is a mortgage broker in Ottawa with mortgagebrokers.com. We will be providing a more detailed of Brian in the coming days.


Friends, 

The most frequent question I hear from clients and colleagues is what type of rate is best...FIXED or VARIABLE ?!? Its a great question and one that I wish I had an absolute answer for.  Historically the variable rate mortgages outperform the fixed rate in terms of interest saved for the client over the term of their payments.  As a result of the record setting low interest rates we have enjoyed as of late I have been an advocate for taking a variable rate and pumping up the payments to the fixed rate in order to pay more principle, avoid unnecessary interest and increase the equity in the home.  Recently however with the bond yields falling and the fixed rates doing the same (5yr fixed for 3.99%!!) the locked in rate is becoming a more and more attractive option for those customers who are a little more risk adverse. Please take a look at this article from the Financial Post which helps illustrate the point.  Again, there is no right or wrong answer here but rather the opportunity to educate the client on their options and make them feel as comfortable as possible with their choice.http://www.financialpost.com/news/Variable+rate+longer/3329442/story.html#ixzz0uwQpMuYU 
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