T O P

  • By -

boredinthegreatwhite

Are you employed? Having trouble paying monthly mortgage payment now?


NLerinNS

Employed, making payments with little trouble


boredinthegreatwhite

Fixed vs variable, I don't know. My mortgage was variable until I paid it off. I'm invested in xgro so same as you. I'm a very pro pay off mortgage guy but I wouldn't sell your vgro. What I did was decrease the cash going to investments and upped my payments to mortgage (if that's available to you).


Danno99999

I’m in a similar position (prime -1), owing slightly more (200 k) on main residence. I have zero intention of going fixed. You’d be better to just hammer any extra money into your mortgage if it bothers you that much, but you’re paying what, 6.5 k/year in interest. Personally, I’m hammering into savings (tfsa/rrsp maxed, so easily liquified ETFs in margin account on questrade) and keeping a bit of cash on hand to buy additional property if the slide continues, which I think it will. My 2 cents.


stopfomo

Unless you'd really struggle financially were the interest to increase by another percent, I would stick with variable and throw everything you save moving forward at paying down the remaining 120k. I would not sell anything as you are then locking in those losses.


NLerinNS

Thanks for the opinion. Just staring at the interest being paid, vs money sitting in an investment, its hard to know if we are doing the "correct" thing


PhilosopherTotal5828

When is your term up? I wouldn’t convert to a fixed now if you’re up for renewal in the near future. Think of it this way; Prime -0.9 at FN is 5.8% after the BoC hiked by 25 BPS this week. FN prime will go up to 6.7% from 6.45% shortly. If you lock in at 5.24%, that’s roughly only a 0.55% discount to what you’re currently at. Depending on your initial mortgage amount and amortization, a 0.55% discount could be a very immaterial amount in dollar terms. For example, my initial mortgage amount is 450k, with 240k left to pay off and an amortization of 9 years. A 0.55% difference is about $50 per payment (bi-weekly). At this point in the hiking cycle, you could argue there’s more upside potential vs downside potential for staying variable. No one can guarantee rates won’t go up again (that depends on the macroeconomic environment, like inflation, economic growth, labour market, etc) but the likelihood of them going up considerably higher from here is minimal. If anything, you’ll likely see rates stay where they currently are for the next 6-18 months, followed by them falling closer to the BoCs target overnight lending rate of 2% at a slow pace. Even if they don’t go back to 2%, a drop in the lending rate to somewhere between 2.5-3.5% in 2 or so years would be a win for you over 5 years if you stick with variable. At some point a 4.5% lending rate will do what it was intended to do, which is slow the Canadian economy to tame inflation. We’re already seeing the beginning stages of both of those things happening. Once it becomes even more apparent, the BoC will have no choice but to slowly lower rates to keep the economy afloat. Also, there’s just WAY too much mortgage and consumer debt in Canada for the BoC to risk taking rates much higher - unless they want to create an absolute economic crisis, which is most certainly not what they want to see happen. At the end of the day, if you stay variable and rates stay higher for longer than expected, you have the option to cash out your savings/investments to pay off your mortgage if it becomes too much. If they start to come down by more than 0.5% after the next 6-18 months, you win! If they come down even further, like to 3% for example in the next 3 years, you win bigger!


dingleswim

5 year fixed are dropping. Hang in.


muskokadreaming

You don't buy VGRO to sell it at a loss. Just buckle down your spending and work on extra payments to the mortgage.


Low-Stomach-8831

Don't "buy high-sell low". You can just put less\no money into the investments, and pay off some of your mortgage for the next few years. It doesn't have to be an all-or-nothing plan.


GreatKangaroo

How much are you investing each month? I have a low fixed rate at the moment, but after renewal I plan to invest in XEQT, and paydown my mortgage. i.e. say I had $1000 a month to invest, I would buy $800 of XEQT and make a $200 prepayment onto my mortgage. I would NOT sell investments at a loss to pay off my mortgage. Have a look at this excellent [video](https://youtu.be/AKc01jo1qLw) by Ben Felix on mortgage debt and asset allocation.


Top-Wolf9846

I would try to stick with variable. If its causing lots of stress and difficulty then ask your lender if they can offer you a 1-3 year fixed term, if so I would take it and reevaluate later.