Another older post that is still very much topical. Why? Is it time to lock into your Mortgage? Now interest rates are rising again, is it time to lock in? Would have been better to do that in 2021.
Figured I’d ask since you really only have a few days left to get it all done. You have 9 days to get it into the CRA. If they owe you money, why didn’t you do this sooner, because it is your money? If you owe them money, wait until the last day to pay them. You can still file early, don’t pay until April 29th. Â Remember the tax man in Canada may not have the sweeping powers that the IRS does in the U.S., but they can still make your life as miserable as possible, if you don’t give them their “fair share”.
Mortgage Lock In Time?
With Interest rates now at historical lows, is now the time to lock into your Mortgage rate?Â
That seems to be a big question going around these days. Here is a better question to ask, if interest rates go up to 10% can you still afford your house? Can you afford the debt load you are carrying?Â
Those are the real questions to ask. When my wife and I bought our first house, we locked in at 12% for five years, because the world was just coming off mortgage rates of 15% and up to 20% so we thought this was the best bargain we could make at that moment. Turned out we were completely wrong and ended up paying a lot more than if we had gone variable or gone with shorter terms.
Were we wrong? No, is my opinion, we could afford the mortgage at that rate and did not want variance in our mortgage payments (where variance means, didn’t want to pay MORE for the mortgage), so we locked in. There is no wrong answer in this area, it is what you feel comfortable with and how you want to plan and architect your financial plan.Â
For the past 8 years I have carried my house on a completely variable interest rate debt vehicle, and it has served me fairly well, but I am hoping to pay it off quickly, once I find another job. I can withstand a fairly steep interest rate jump (I’ll complain a lot mind you), but for me I feel ok with my current decision about staying at a variable rate.
The whole goal is to get rid of this debt so that you can then use your money to build wealth, not just pay off debt.
Do you feel safe with the current interest rates? What would happen if they shot up to 10% in a year (say like oil prices did)? Are you confident there is no Inflation on the financial event horizon?
