Varable Rate Mortgages (VRM's)

Since the early 1990’s, VRM’s have been thought of by some people as the cheapest alternative when financing their home. Reason being is that the interest rates have been on the decline with only short intervals of upward trends. Those that have chosen the VRM have enjoyed watching their rate drop while the fixed rate that they would have taken remains fixed at the higher rate.

Are VRM’s still the best way to borrow? The only way to know for sure is if we could predict future interest rates.

Before deciding whether or not a VRM is for you, consider this:

VRM’s are best suited for people who are:
	Higher risk takers (invest in Mutual Funds or stocks)
	Debt free or have little outside debt
	Able to afford increases to their monthly payment should Prime Rate go up
	Budget disciplined
	Income stability is strong

Fixed rate mortgages are better suited for people who are:
	Lower risk takers (invest in “safer” RSP’s/instruments)
	In debt with high monthly payments on their credit cards &/or monthly installment payments
	Not able to afford increases to their mortgage payments should Prime Rate go up
	Not good budget keepers
	Income stability is not strong

Alternatively, some mortgage lenders offer a “split mortgage” where you can split your mortgage into part fixed and part variable rates. This is an option available to you when you deal with 1 st Class Mortgages.

The good news is that you don’t have to make the decision right now. Ideally, the decision should be make within about 30 days of completion date.