1st mortgage any advice?

[MacNasty]

I am getting a bit confused about the whole thing at first I thought I would go with a fixed 5 year rate with a large bank. Now some people have been advising me to take a variable mortgage through a broker.

I also thought it wold be better to go on a 25 year accelerated but I have recieved advice to go with a 35 year and just pay up lump sums to pay it quicker but keep obligations lower.

I also thought I should make as big a deposit as possible but both my personal banker and my friend who is also a banker advised that 5% minimum dposit is better? (not sure why?)

Now I am not really sure what I think anymore. I had been planning to buy $20000 in rsps this year for the 1st time homebuyer guide but my banker advised against it because she said it would tie up my deposit too long.

Any help with any of these issues would be greatly appreciated. I have been doing some reading and thought I had a decent idea of what i wanted but this conflicting advice has really got me doubting my judgement.

[Avitoholis]

Great questions, interested in hearing some of the feedback on this one. You might be able to find some helpful info at mortgage information center (http://mortgageinformationcentre.com)

I'm actually just selling my first home, it went on the market last week, and that means buying a new house. Personally I would pick a fixed rate mortgage to be safe, the guys with the variable might pay less at times but I personally prefer the security of knowing I'll be paying the same amount for the next five years. As for the down payment, if you don't have the %20 to avoid CMHC Fees I would just pay the %5, this allows you to use your money in other areas that may yield higher returns or you could pay off some high interest debt. If that doesn't apply to you than put a larger down payment down. Also, I'd go for the 35 year just knowing that I can always add more money to my monthly payments and pay it off quicker If I choose to do so, but the extra money in my pocket at the beginning to take care of extra costs associated with owning a home is really nice. Good luck.

[gicantor]

I just got my first mortgage a few days ago. I went with 25 years locked in at 3.79% for 5 years. 5% down.

I was going to go with variable rate at first but my mortgage broker said prime is going up so we locked it in while rates are low.

And i agree with the above unless you have 20% to put down to get out of the CMHC just put 5% down. An extra 20 thou down only takes off roughly 100 bucks a month. I'd rather have that money in the bank as a safety net or invest it.

[gingerbreadman]

Prime is undoubtably going up but I still think variable will be cheaper over 5 yrs the economy will not make that fast a recovery that a fixed rate will be cheaper in that period of time imo. In 10 years there may be a different answer. In the 1980's having a mortgage was suicide the rates were out of control - that won't happen again soon - we're just slowly making our way out of a recession and the banks are more cautious and the government is keeping a watchful eye on things.

However, the value of stocks/bonds/the market (RRSP's) will likley rebound quicker than mortgage rates will increase so I'd stuff the cash into the RRSP right now especially if you have good income in the higher tax brackets ($50k & up) to offset it with. But often this is just splitting hairs anyway - an ongoing debate of "pay off mortgage or top up rrsp" there's never a blatently obvious decision there.

[nii]

An extra 20 thou down only takes off roughly 100 bucks a month. I'd rather have that money in the bank as a safety net or invest it.
In personal finances, before you leverage yourself OR invest in capital markets, you SHOULD have a 1yr safety net.


However, the value of stocks/bonds/the market (RRSP's) will likley rebound quicker than mortgage rates will increase so I'd stuff the cash into the RRSP right now especially if you have good income in the higher tax brackets ($50k & up) to offset it with. But often this is just splitting hairs anyway - an ongoing debate of "pay off mortgage or top up rrsp" there's never a blatently obvious decision there.

Ill have to pipe up with that ongoing debate. We have no idea how old he is, the value of is RRSP, his time horizon etc, suggesting that the HBP is a waste at this point in time, i would say is foolish. Depending on his tax bracket, hed be well advised to take advantage of the HBP and refill his RRSP over the next 3-5 years. Ive always been a fan of paying down the mortgage as you're getting a guaranteed rate of return. But his advisor is suggesting otherwise, so maybe they have information thats valuable that isnt displayed here.

[RagingRandy]

I am getting a bit confused about the whole thing at first I thought I would go with a fixed 5 year rate with a large bank. Now some people have been advising me to take a variable mortgage through a broker.

I also thought it wold be better to go on a 25 year accelerated but I have recieved advice to go with a 35 year and just pay up lump sums to pay it quicker but keep obligations lower. This requires the discipline to do so. If you do not have the discipline go with the 25 year. Most people will adjust lifestyle to fit after-expense income.

I also thought I should make as big a deposit as possible but both my personal banker and my friend who is also a banker advised that 5% minimum dposit is better? (not sure why?) If you have 25% you do not have to pay CMHC fees.

Now I am not really sure what I think anymore. I had been planning to buy $20000 in rsps this year for the 1st time homebuyer guide but my banker advised against it because she said it would tie up my deposit too long. I believe there is a waiting period from the time you contribute until when you can withdraw. I do not think you can contribute and then withdraw the next week.

Any help with any of these issues would be greatly appreciated. I have been doing some reading and thought I had a decent idea of what i wanted but this conflicting advice has really got me doubting my judgement.

See above in red

[faller]

We've never bought into the whole RRSP scam (well once only because my wife was paying through the nose). Any extra money we have go's into a mortage. Equity in the relastate go's up which is freed up money, which in turn enables you to reinvest more easly.