Investors must be chomping at the bit to scoop up downtown resale condos in what\u2019s become a buyer\u2019s market with historically low interest rates, but what kind of mortgage makes most sense in the age of COVID-19?<\/p>\n
\u201cI\u2019d go variable and take a wait-and-see approach because there\u2019s so much economic uncertainty,\u201d said Daniel Johanis, a mortgage broker with Rock Capital Investments. \u201cTry to get a product that\u2019s convertible so you can lock it in down the road if you want to. Variable gives borrowers way more flexibility because we don\u2019t know what could happen down the road\u2014what if we go into a third lockdown or maybe the economy doesn\u2019t recover as quickly as it\u2019s been predicted to?\u201d<\/p>\n
Investors with multiple properties usually have longer horizons, and Johanis says they shouldn\u2019t be overly concerned about incurring a penalty on their mortgages.<\/p>\n
\u201cWhat I typically do is, for example, if a client is at maturity on a rental property, we it and put them into a product where they have access to every advanceable portion, like a home equity line of credit, reregister the mortgage but then lock it in and stay with a fixed rate if the plan is to hold onto the property for a long time.\u201d<\/p>\n
On the other hand, added Johanis, neophyte investors often opt for peace of mind.<\/p>\n
\u201cUltimately, it\u2019s up to them, but the majority of newer investors aren\u2019t comfortable staying in variable rate mortgages, although they may in the property that they live in because they have more control over it, but typically with investments they go fixed.\u201d<\/p>\n
Davelle Morrison, a broker with , generally agrees with Johanis and, noting that the Bank of Canada expects interest rates to remain low for the next couple of years, recommends investors choose variable rate mortgages.<\/p>\n
\u201cThere isn\u2019t much risk, in terms of a rate increase,\u201d she said, \u201cbut if you\u2019re the kind of person who needs reassurance and you\u2019re not comfortable doing a variable, go ahead and get the fixed mortgage.\u201d<\/p>\n
Morrison nevertheless recommends making fixed rate payments on a variable rate mortgage because they go towards paying down the principal amount.<\/p>\n
\u201cLet\u2019s say your mortgage payment is $2,000 a month on a variable and the mortgage payment is supposed to be $2,100 on a fixed, I would take the variable with the lower rate but still spend $2,100 a month,\u201d she said. \u201cThat way you know that you\u2019ve actually got that $100 a month going towards your principal. If you take the fixed at $2,100, it\u2019s just the bank getting rich off your money, really.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"
Investors must be chomping at the bit to scoop up downtown resale condos in what\u2019s become a buyer\u2019s market with historically low interest rates, but what kind of mortgage makes most sense in the age of COVID-19? \u201cI\u2019d go variable and take a wait-and-see approach because there\u2019s so much economic uncertainty,\u201d said Daniel Johanis, a […]<\/p>\n","protected":false},"author":6,"featured_media":22983,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[4],"tags":[],"acf":[],"_links":{"self":[{"href":"https:\/\/www.canadianrealestatemagazine.ca\/wp-json\/wp\/v2\/posts\/8878"}],"collection":[{"href":"https:\/\/www.canadianrealestatemagazine.ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.canadianrealestatemagazine.ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.canadianrealestatemagazine.ca\/wp-json\/wp\/v2\/users\/6"}],"replies":[{"embeddable":true,"href":"https:\/\/www.canadianrealestatemagazine.ca\/wp-json\/wp\/v2\/comments?post=8878"}],"version-history":[{"count":1,"href":"https:\/\/www.canadianrealestatemagazine.ca\/wp-json\/wp\/v2\/posts\/8878\/revisions"}],"predecessor-version":[{"id":22982,"href":"https:\/\/www.canadianrealestatemagazine.ca\/wp-json\/wp\/v2\/posts\/8878\/revisions\/22982"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.canadianrealestatemagazine.ca\/wp-json\/wp\/v2\/media\/22983"}],"wp:attachment":[{"href":"https:\/\/www.canadianrealestatemagazine.ca\/wp-json\/wp\/v2\/media?parent=8878"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.canadianrealestatemagazine.ca\/wp-json\/wp\/v2\/categories?post=8878"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.canadianrealestatemagazine.ca\/wp-json\/wp\/v2\/tags?post=8878"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}