Fixed, Variable or Both?

When buying a house and taking on a mortgage, one of the more difficult decisions you’re faced with is whether to go with a fixed rate or variable interest rate. For many, the comfort of knowing exactly what they’ll be paying each month is worth more than the chance that they’ll pay less in the end.

Today, that decision has been made even harder with the current and unpredictable state of the economy. You may be tempted to decide on a fixed rate right now because interest rates are lower than ever and the chances are that they’ll go up. On the other hand, if they don’t go up much, you may lose money by not opting for variable.

According to Canadian Mortgage Broker News this sticky situation has lead to the rise of combination mortgages, also known as hybrid mortgages.  This option enables a borrower to lock into a fixed rate for a period of three to ten years, which will then change to variable.With a hybrid mortgage you can be comforted by the fact that your monthly payment will remain the same for the first few years or so of owning your home and you can lock in while interest rates are low. You’ll be given a lower rate than if you were to choose a permanent fixed rate and some like Merix Financial’s 50/50 Wise Mortgage  give you the option of locking into a fixed rate at

any time.

This sounds great, but some experts warn that it’s not for everyone. A three year hybrid mortgage could be a great deal, but no one knows exactly where interest rates will be three years from now. Although a seven or ten year fixed rate may cost a little more per month, it will give you more time to consider moving or refinancing before you’re faced with what could be a much higher variable rate. For this reason, hybrid mortgages work better for people who don’t plan to live in their home for more than ten years or for those who intend to refinance.

This type of mortgage may require a minimum credit score so if you’re one of these people and think hybrid is the option for you, you’ll want to start by creating an impressive application 

//  and meeting with a lender. Choosing the right mortgage for you is something that will affect you for many years to come so you’ll want to know your stuff  // and be prepared.
With interest rates so low it’s a great time to buy a home and take advantage of the many mortgage options available to you. Hybrid is just one way to gain some steady ground in this very unstable economy.

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