moving

Hi Folks,

Have located a house, and am planning to take a mortgage from the bank. We have a choice of opting for a variable rate of interest (currently at 3%) or a fixed rate of interest (4.05%). Which is better?

Thanks.

dbd33

Depends what you think will happen to the mortgage rate and how risk tolerant you are. You could ask for half and half, variable and fixed, so as to hedge your bet.

Scouse

Just out of interest, how long is the 'fixed' rate actually fixed for?

Is it for, eg, 1 -2 years, or for the total period of the mortgage?

dbd33

It's fixed for the term of the mortgage, say five years, but that's not the amortization period of the loan. The system here is that the mortgage contract runs for a much shorter period than it takes to pay off the debt and the borrower must renogtiate every few years. There's quite the choice of lenders, the big banks offer fixed, variable and convertible loans at various rates. They may also give you a line of credit (like a credit card spending limit) large enough to buy a house. There are also private lenders and virtual banks such as ING Direct (a virtual bank doesn't have any physical presence in the country but deals by telephone and internet) as well as grocery store banks (the Loblaws grocery chain operates PC Financial; a bank).

When we were new immigrants the banks wouldn't touch us, so the house vendor accepted payments on a monthly basis, what's called a Vendor Take Back mortgage, at a high rate. Note also that the banks wouldn't give us a Visa or Mastercard which is why twenty odd years later I still use Barclaycard and our corporate card is Amex. Were I moving countries today I would look to deal with an international bank, like ING, if they have no offices in Canada it shouldn't matter to them that a customer has no credit history in Canada.

moving

Thanks a ton folks for the input..it really helped!!!!!!!!!!!!

Scouse

[QUOTE=dbd33]It's fixed for the term of the mortgage, say five years.......



I can only agree with moving - excellent info, and many thanks.

Scouse

Smokey

I'm just a little curious about you keeping your Barclaycard. I've had the impression that you'd get caught on the exchange rate. When I contacted them, they told me that they would change my address to a canadian one but would still bill in £££'s. Can you tell me about your experiences with it?

dbd33

When I arrived, in 1981, I had an Access card and a Barclaycard with a couple of thousand pounds outstanding on each of them. I had no assets so it took a couple of years to pay them off (they sent statements and I sent money orders). Once I'd paid them off I applied for a local Visa and Mastercard, both turned me down but Amex gave me a card. For maybe fifteen years after that I just paid the annual fee on the UK cards and was pretty slothful about doing that; eventually they cut the Access off because I owed them five pounds or so for three months.

I didn't use the Barclaycard until about six months ago when we acquired a dog and started ordering dog food online, the dog food place was the first firm I'd dealt with for over a decade where they didn't take American Express or debit cards. Dog food is $63.20 delivered, Barclaycard charge 74p commission on that and translated it to GBP 27.75. In order to pay that I'll get a money order and post it. Fortunately I use a currency broker for work and he'll create the money order for just the exchange ; at the bank it's $20 + the exchange. It's nice dog food, but it's not that nice, so when the current bag is gone we'll switch to a national brand and order it using Amex. Anyone else would probably just get a local Visa, they write and offer every week, but I'm old and vengeful.

Overall, use of credit cards billed in other than the currency in which you're paid is lunacy. Just the $20 to buy the money orders is a killer. Do not, by the way, imagine for a moment that the Canadian banks are any good with foreign money, many clients pay us in US dollars and it was very expensive and impractical to change those at the bank ; hence the close relationship with a currency broker.

Smokey

Thanks for the info....very interesting as we come 'out of the box' on our income so it was only due to BMO's help did we get a low credit credit card. I still have my B'card and as I'm thinking about a large purchase it may be worth considering as a one off purchase as I have stonking credit in UK.
Cheers.

sysclp

Actually ING has a couple of offices here in Toronto. One is downtown (not sure where, but my husband went there once) and the main one is just off the 404 just north of Sheppard. I went there in person to open my account back in 2001 so I could get the money in quicker than mailing a check.

dbd33

Please amend "offices" to read "conventional branch network" or amend the example of ING to "Grabill Bank".

kerri

Who else pays you 2.4% interest on a saving or current account? You are allowed to use other banks ATM 4 times a month for free, and anything after that, you pay the ATM fees