What term mortgage should I choose?
Historically, the shortest term mortgage (ie. 6 month terms for 25 years) has been the least expensive route when financing your home.
Floating has been less expensive than fixed mortgages as institutions do not have to build in a hedge to offset interest fluctuations.
Longer terms provide stability against interest fate fluctuations as well as not having to deal with the paperwork and the stress of numerous renewals.
Here are some questions that you should consider:
1) Are you able to tolerate interest rate fluctuations and do you have the temperament to not worry about them?
2) What do you think interest rates are going to do?
3) What are your personal plans? Do you have a growing family and need more space? Are the kids leaving home and you want a smaller place? Is there a chance you can be transferred? (ie. I think I will be transferred in 3 years so I want a 3 year mortgage.)
My advice is to take a mortgage that fits your needs. Talk to your banker, accountant, lawyer, mortgage broker, etc. There is wisdom in much counsel.
Rory Campbell
