So my other (better?) half and I have been looking at buying a home, as we're currently renting and are comfortable with the long term commitment.

My issue is that every bank and financial institution I've looked at has provided me virtually nothing aside from "Hey, let's get you pre-approved for that mortgage!" when I really want a better understanding. I guess my patience with people has lessened, because when I've asked them for information about first time home buying and mortgages and they've responded with that, I've discontinued communication (for the time-being, at least) since they clearly aren't listening to me.

We've looked at houses outside the city core ($350-405k) and condos inside ($300-450k), and found a kind of happy medium (2 story-condo 5 minutes from downtown) that should fit the bill and leave us with some strong savings ability since the price is low.

Based on the current market, can anyone make a speculate and make recommendation about what the best option will be for us between the following mortgage terms:

Mortgage Amount: $270k (down payment aside)
Amortization: 25 years

1) 3-Year Fixed Rate
- 3.99%
- $1418.79 / month

2) 5-Year Fixed Rate
- 4.54%
- $1500.39 / month

3) 5-year Variable
- 1.75%
- $1111.01 / month

I know which looks nicest on a monthly and will allow us to put aside tons of cash, but I don't want to be in a situation 2 years from now when that 5-year variable rate is at 8.9% or something. Is that possible (or likely)?

 

Given 30 fixed rate loans are at historic lows, I can't imagine signing an ARM.

 

Call me right now at *********, i am no longer in the mortgage biz so i'm unbiased but know pretty much everything. I'm on my lunch break until 12:15 cst.

 

You might want to double check the terms on those mortgages, especially option 1 and 2. They're not 3 and 5 years mortgages, I can tell you that.

36*1418.79=51076.44


60*1500.39=90023.40

Anyway, my 2 cents is not to buy property together unless you're married. But it in one person's name and have the other pay rent or pay other bills.

 

He's in Canada. From what i remember some people telling me, the housing/credit market isn't nearly as impacted as the US

 

This is very true. We didn't have nearly the same shit storm that the US did, though there is an obvious link between our economies.

Fapout, calling you in 2 seconds. Thanks

 

^ 2 minutes actually, gotta hit the head.

 

Actually, they are. They do things differently in Canadia, and don't generally offer 15 & 30 year mortgages. Instead, you get a 3-5 year mortgage that is *amortized* over 15-30 years, but you basically have to refinance (and lock in new rates) every 3-5 years.

That's about as much as I know about Canadia's system. Based on that, I don't understand what the difference in their 5-year fixed rate mortgage and their 5-year variable rate mortgage. I guess it depends on when the rate adjustments occur on the variable rate mortgage. Maybe that happens every year within that 5 years.

Normally, in the US, you get something like a 5+1 variable rate mortgage, meaning it's fixed for the first 5 years, then the rate is adjusted every 1 year after that.

 

You got it. The rates are locked (if you go with fixed) only for the term you choose. Shorter term fixed rate = lower rate, but you might be in an awkward spot if the rates climb significantly. Frankly I think right now it'd be best to lock in as long a term as possible but the higher rate would impede our ability to do as much saving as we hope to over the next few years.


Thanks to Fapout for taking a few minutes away from his lunch to give me some better insight than any of the "experts" I've found locally

 

Looks like you got the answers you need already.. Given how mortgages work in Canada I'd be a little more inclined to go variable than I would be in the States -- when I first moved here it seemed too good to be true, I'm now locked into a 30-year mortgage at around 5% (good for someone with a short credit history in the US and >75% LTV in a condo highrise). But imho if you couldn't afford your mortgage if the rate shot up (not unlikely) then it's not a mortgage you can truly "afford".

BTW what area of Calgary are you looking at? I used to live in Kensington and sure miss that area.