(NC)-How can I save money on my mortgage? Am I getting the best deal? Should I go with a fixed rate or should I float? Homeowners ask themselves the same questions whenever their mortgages come up for renewal or they buy a new home. Add this to the wild card of where interest rates will go and many think the answer is a fixed-rate product. But is that the best option?
A long-term, fixed-rate mortgage can feel secure - you know what your rate and payments will be for the whole term. But that security comes at a pretty big cost, according to a study commissioned by Manulife Bank. It concluded three things:
1. You're better off with a floating rate: Almost nine times out of 10 in the past 50 years, consumers would have been better off with a variable-rate product than locking in to the five-year fixed rate.
2. Fixed-rate mortgages cost too much: The average interest savings on a 15-year, $100,000 floating-rate mortgage would have been more than $22,000.
3. There's no reliable way to tell when's the right time to lock in: No matter how clear you think your crystal ball is, there are no reliable signs to help you judge when you should go with the fixed rate.
So before you decide to lock into a five-year, fixed-rate mortgage account, take a look at your floating rate options, such as Manulife One. It's a variable rate mortgage that combines both your chequing and borrowing accounts, using your monthly cashflow to your benefit.
If you would like to learn more about flexible mortgage accounts, visit Manulife One's web site at www.manulifeone.ca or call 1-877-765-2265.
- News Canada
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