What is a variable interest rate mortgage?
A variable interest rate mortgage is a mortgage loan with an interest rate that can change during the term. The interest rate varies with changes in market interest rates (typically the bank's prime lending rate). The mortgage payments can be fixed, or they could change if the interest rate changes — it depends on the lender and type of product.

 

What are the benefits?
If market interest rates are stable or go down during your term, you could pay less in interest than with a fixed interest rate mortgage. By the end of your term, it is possible that you could have paid more toward your principal than expected and less towards interest, which would reduce the balance owing and shorten the time needed to pay off your mortgage.

 

What are the risks?
If market interest rates go up during your term, your interest rate would increase and you would pay more in interest to the lender. As a result, by the end of the term, you might have paid more in interest than if you had chosen a fixed interest rate mortgage. It also means that by the end of your term, you might pay less of the principal than expected, which would lengthen the time needed to pay off the mortgage.

 

Depending on the lender and the terms of the variable rate mortgage, another risk is that your payment could increase if the interest rates increase. Consider how much of an increase in mortgage payments you could handle. If you don't think you can handle the risk of your mortgage payment increasing, or do not have enough cash flow, you may be better off with a fixed interest rate mortgage. Below, you can see an example of how interest rate changes can affect a mortgage.

 

What makes variable interest rate mortgages attractive?
The interest rates on variable rate mortgages are often lower than the fixed interest rate offered at the time you sign the contract. However, whether you are better off with a variable interest rate mortgage compared to a fixed interest rate mortgage depends on the movement of market interest rates during the life of your mortgage, called the "term". This movement is difficult to predict. For example, between 2000 and 2009, the Bank of Canada Bank Rate varied from 0.5% to 6.00%.

 

What happens to mortgage payments when interest rates change?
When interest rates change, depending on the lender and the terms of your mortgage, the following scenarios are possible:

 

  1. Your payment goes up or down each time market interest rates change.

  2. Your payment stays the same when market interest rates go down, but increases when market interest rates go up. In this scenario, more of your payment goes toward paying down the principal when the interest rate falls.

  3. Your payment does not change unless market interest rates increase to a "trigger" point (shown in your mortgage agreement). Only at that point will the lender increase your payment.

 

Example:John takes a mortgage with variable interest rate and the following terms and conditions:

  • principal amount borrowed: $200,000
  • term (length of the mortgage agreement): 5 years
  • amortization period: 25 years
  • interest rate: variable, initially set at 3.00 %
  • monthly payment: variable.

 

The lender explains to John that his payments will go up and down with the interest rates. At first, John's interest rate is stable at 3.00 percent %. Starting in the second year, market interest rates begin to climb and so do his payments.

 

 Interest rate1Monthly paymentInterest paidPrincipal paid
(1) In this scenario, interest rate changes happen at the beginning of the year
Year 1 Initial interest rate: 3.00% $946 $5,889 $5,469
Year 2 rises to 3.50% $997 $6,676 $5,285
Year 3 rises to 4.00% $1,046 $7,415 $5,143
Year 4 rises to 4.50% $1,096 $8,106 $5,041
Year 5 rises to 5.00% $1,144 $8,749 $4,978
TOTAL - - $36,834 $25,916

In this example, the interest rate goes up 2% over the five-year term. Keep in mind that interest rates could go up or down more or less than 2% over that period, and those changes would affect calculations.

 

John's alternative at the time was a five-year fixed-rate mortgage. In the example below, the bank offered him a fixed rate of 4.00 percent for five years.

 

 Interest rateMonthly paymentInterest paidPrincipal paid
Years 1 to 5 4.00% $1,052 $37,230 $25,892

 

After five years the amount of interest and the amount of principal John paid with a fixed or variable rate mortgage would be almost the same. The main difference is that with a variable rate mortgage, John's monthly payments would change from year to year, but with a fixed interest rate John would know that his payments would stay the same for the full five-year term.

 

Protecting yourself against a rise in interest rates
Some lenders offer interest rate caps or convertibility features on their mortgages. These features can offer some protection if interest rates go up. You can only get these features when you sign a new mortgage agreement that includes them.

cap is the maximum interest rate that can be charged on a mortgage, regardless of the rise in market interest rates. For these types of mortgages, usually the payment amount is based on the cap rate and will stay the same for the term.

If you have a mortgage with a convertibility feature, you can change it to a fixed interest rate mortgage during the term. Although the lender will usually not charge a penalty for doing this, conditions may apply—check with the lender.

 

Questions to ask a mortgage lender

  • How often could my payments change — each time the interest changes, or on what other basis?

  • If the interest rate goes up by 1.00% during the term of my mortgage, how much would my payments increase based on my current mortgage balance? If the rate increased by 2.00%, how much would my payments increase?

  • If my interest rate increases, can I choose to increase my payment so that the length of time to pay off my mortgage stays the same?

  • Are there any conditions under which the payments would stay the same? For example, is there a minimum interest rate increase required to trigger an increase in my mortgage payments?

  • If there is a "trigger" interest rate, how would I be notified of the increase in mortgage payments?

  • Do you offer mortgages with interest rate caps or convertibility features? What are the conditions of using these features?
Read Full Story
I have sold a property at 307 1808 3RD AVE W in Vancouver.
Welcome to KORE! This luxury concrete condo has it all - located right in the heart of beautiful Kitsilano. This spacious one bedroom corner unit is just 2 years young and features plenty of natural light, high end finishings, a largebalcony, hardwood floors throughout, open-concept kitchen, stainless steel appliances, Caesarstone & marble counters, gas cook top and floor-to-ceiling windows with great city/mountain views. Close to everything in Kitsilano, UNDER assessed value, best priced unit in the building and no HST -- don't miss this one! First Open November 13, Tuesday, 10:00-12:00
Read Full Story

There is a currently an issue with the Mobile Searches portion of our website. This search feature immediately activates for any device that triggers the Mobile Searches portion of our website (iPhone, Android Tablet, etc). Unfortunately, there is no work around but technicians are looking into the issue.

Searches from Desktop computers and laptops should not be affected.

In the meantime, please feel free to contact us directly if you require detailed information on any property. Thanks.

Read Full Story

Sales Chart 1977 to 2012

 

“Buyer demand increased slightly in October compared to the previous few months,” Sandra Wyant, REBGV president-elect said. “Overall conditions in today’s market remain in favour of buyers, with low interest rates, more choice, and less time pressure in terms of decision-making. This translates into a calmer atmosphere for those looking to buy a home and it places more onus on sellers to ensure their homes are priced to compete in today’s marketplace.”

Read Full Story
Please visit our Open House at 307 1808 3RD AVE W in Vancouver.
Open House on Saturday, November 17, 2012 2:00 pm - 4:00 pm
Welcome to KORE! This luxury concrete condo has it all - located right in the heart of beautiful Kitsilano. This spacious one bedroom corner unit is just 2 years young and features plenty of natural light, high end finishings, a largebalcony, hardwood floors throughout, open-concept kitchen, stainless steel appliances, Caesarstone & marble counters, gas cook top and floor-to-ceiling windows with great city/mountain views. Close to everything in Kitsilano, UNDER assessed value, best priced unit in the building and no HST -- don't miss this one! First Open November 13, Tuesday, 10:00-12:00
Read Full Story

Perhaps the most bullish indicator for U.S. housing is Warren Buffett. The legendary investor has been buying up real-estate brokerages around the country as he bets on a housing turnaround. Now, he is partnering with Brookfield Asset Management, a Canadian real-estate investor, to more than double the size of his brokerage business.

Berkshire’s HomeServices of America Inc. unit will be the majority owner of the venture to manage a U.S. residential real-estate affiliate network, according to a statement on the new company’s website. The firms plan to offer a new franchise brand, Berkshire Hathaway Home Services, starting next year. Brookfield’s network has operated under the Prudential Real Estate and Real Living Real Estate brands.

Berkshire’s managers have been positioning the firm to benefit as the U.S. home market recovers from its worst slump in seven decades. The Omaha, Nebraska-based company has bought a brickmaker, won the loan portfolio of bankrupt mortgage lender Residential Capital LLC at auction and built its HomeServices unit by agreeing to acquire real-estate brokerages in states including Oregon and Connecticut.

The press release says the brokerages that will make up the new company did a combined $72 billion in sales in 2011. That's more than twice the $32 billion in sales that Berkshire did in 2011 without the new brokerages.

The combined networks of more than 53,000 Prudential Real Estate and Real Living Real Estate agents generated in excess of $72 billion in residential real estate sales volume in 2011, and operate across more than 1,700 U.S. locations.

“Berkshire Hathaway HomeServices is a new franchise brand built upon the financial strength and leadership of Brookfield and HomeServices,” said Warren Buffett, chairman and CEO of Berkshire Hathaway Inc. “I am confident that these partners will deliver value to the residential real estate industry, and I am pleased to have Berkshire Hathaway be a part of the new brand.”

...

“The strength of the Berkshire Hathaway name, coupled with the operational excellence of HomeServices and the franchising experience of Brookfield, positions Berkshire Hathaway HomeServices® as a leading real estate franchise in the U.S., building on our traditions of exceptional client service and innovation. Brookfield is excited to be a partner in creating a home for the best real estate brokers and agents in the country,” said Bruce Flatt, Brookfield Asset Management CEO.

Buffett has been public about his bullish housing call for a while as he's built his residential real-estate brokerage business, but this is a big addition.

 

Source: Business Insider

Read Full Story
Please visit our Open House at 307 1808 3RD AVE W in Vancouver.
Open House on Tuesday, November 13, 2012 10:00 am - 12:00 pm
Welcome to KORE! This luxury concrete condo has it all - located right in the heart of beautiful Kitsilano. This spacious one bedroom corner unit is just 2 years young and features plenty of natural light, high end finishings, a largebalcony, hardwood floors throughout, open-concept kitchen, stainless steel appliances, Caesarstone & marble counters, gas cook top and floor-to-ceiling windows with great city/mountain views. Close to everything in Kitsilano, UNDER assessed value, best priced unit in the building and no HST -- don't miss this one! First Open November 13, Tuesday, 10:00-12:00
Read Full Story
I have listed a new property at 307 1808 3RD AVE W in Vancouver.
Welcome to KORE! This luxury concrete condo has it all - located right in the heart of beautiful Kitsilano. This spacious one bedroom corner unit is just 2 years young and features plenty of natural light, high end finishings, a largebalcony, hardwood floors throughout, open-concept kitchen, stainless steel appliances, Caesarstone & marble counters, gas cook top and floor-to-ceiling windows with great city/mountain views. Close to everything in Kitsilano, UNDER assessed value, best priced unit in the building and no HST -- don't miss this one! First Open November 13, Tuesday, 10:00-12:00
Read Full Story
Categories: 1940s | 2011 | 2012 | 2013 | 2014 | Active Listings | Affordability | Affordable Housing | Amalia Liapis | Apartment | Arbutus | Assignments | Average Price | Awards | Bakery | Balanced Budget | Bank of Canada | banking | BC | BC Building Code | BC Government | BCREA | Beauty Salon | Benchmark | Benchmark Price | Bonds | Boundary Road | Bowen Island, Bowen Island Real Estate | Brentwood Park | Brighouse, Richmond Real Estate | British Columbia | Budget | Budget Friendly | Budget Renovation | Building Management | Burnaby | Burnaby North Real Estate | Burquitlam | Business | Business Owner | Buying | Buying Property | Cafe | Cambie | Cambie Corridor | Cambie, Vancouver West Real Estate | Canada | Capilano Highlands, North Vancouver Real Estate | Cedar Cottage | Cedar Hills, North Surrey Real Estate | Central Park BS, Burnaby South Real Estate | Champlain Heights, Vancouver East Real Estate | Character Building | Character Home | Cheap | Chilliwack | Chinatown | Christy Clark | City of Vancouver | Civil Resolution | Civil Resolution Tribunal | CLI | Closing Costs | CMHC | Coal Harbour | Coal Harbour, Vancouver West Real Estate | Collingwood | Collingwood Vancouver East, Vancouver East Real Estate | Collingwood VE, Vancouver East Real Estate | Commerce | Commercial | Commercial Building | Commercial Property | Commercial Real Estate | Commercial Sales | Commercial Space | Commercial Units | Commodity | Communities | Community | Community Profile | Como Lake | Concrete Building | Condo | Condominiums | condos | Construction | Contract | Coquitlam | Coquitlam West, Coquitlam Real Estate | CPI | Creative | CRT | Current Demand | Custom Built | Custom Home | Decor | Demand | Demolition | Detached Home | Detached Properties | Development | Dispute | DIY | Downpayment | Downtown | Downtown Eastside | Downtown NW | Downtown NW, New Westminster Real Estate | Downtown Vancouver | Downtown VE, Vancouver East Real Estate | Downtown VW, Vancouver West Real Estate | DTES | Dunbar | Dunbar, Vancouver West Real Estate | Duplex | East Hastings | East Pender | East Vancouver | Eastside | Economic | Economic Growth | Economics | Economy | Employment | Energy | Energy Efficient | Entrepreneur | Environmentally Friendly | Equity | Fairview VW, Vancouver West Real Estate | False Creek | False Creek, Vancouver West Real Estate | Family | Federal Government | Finance | Financial | Financial Market | Financial Outlook | financing | First Nations | First Time Buyer | First Time Home Buyerr | First-Time Buyer | Fiscal Policy | Fitness Studio | For Lease | For Sale | forecast | Foreign Activity | Foreign Buyers Tax | Foreign Tax | Forest Glen BS, Burnaby South Real Estate | Fraser Valley | Fraser VE | Fraser VE, Vancouver East Real Estate | Gastown | GDP | Gentrification | Glenayre, Port Moody Real Estate | Global | Government | Government Sites | Grants | Greater Vancouver | Green | Gym | Hastings | Hastings Crossing | Hastings, Vancouver East Real Estate | Heritage | Heritage Building | Hidden Costs | Historic Chinatown | Home | Home Decor | Home Owner Grant | Home Price Index | Home Problems | Home Renovation | Home Sales | Home Upgrade | Homebuying | Homeowner | Homeowner Tips | House | House For Sale | Housing | Housing Demand | Housing Market | Housing Stats | Housing Trends | Housing Update | HPI | HST | Increasing Value | Industrial | Inexpensive | Inflation | Inflation Control | Insurance | Interest | Interest Free | Interest Rate | Interest Rates | International | Investment | investments | Kensington Gardens | Kensington Heights | Kerrisdale, Vancouver West Real Estate | Killarney | King Edward | Kingsway | Kitsilano | Kitsilano, Vancouver West Real Estate | Kiwassa | Knight, Vancouver East Real Estate | Land | Land Redevelopment | Land Sales | Laneway House | Lease | Lease Agreements | Leased Space | Leasehold Property | Leasing | Legal | Legislation | Listing | Listings | Loan | Loan Program | Location | Lower Lonsdale, North Vancouver Real Estate | Lower Mainland | Luxury Home | Luxury Market | Lynn Valley, North Vancouver Real Estate | Main Street | Main, Vancouver East Real Estate | Management | Marine Way | Market | Market Demand | Market Statistics | Market Stats | market trends | Marpole, Vancouver West Real Estate | McNair, Richmond Real Estate | Metro Vancouver | Metrotown | Metrotown, Burnaby South Real Estate | Mixed-Use | Mixed-Use Complex | MLS | MLS Listings | MLS Stats | Monetary Policy | Money Savings | mortgage | Mortgage Rate | Mortgage Rates | Mount Pleasant | Mount Pleasant VE, Vancouver East Real Estate | Mount Pleasant VW, Vancouver West Real Estate | Multi-Family | Multi-Use | Neighbourhood | Neighbourhood Project | New Business | New Development | New Home | New Listing | New West | New Westminster | Oakridge | Office | Office Project | Office Space | Offshore | Olympic Village | Online Tribunal | Open House | Open Space | Otter District, Langley Real Estate | Partnership | Point Grey | Point Grey, Vancouver West Real Estate | Port Moody Centre, Port Moody Real Estate | Portfolio | Price Gap | Price Trends | Prices | Professional Business | Projections | Property | Property Management | Property Owners | Property Taxes | Property Transfer Tax | Purchase | QuadReal | Queens, West Vancouver Real Estate | Quilchena | Quilchena, Vancouver West Real Estate | Railtown | Real Estate | Rebates | REBGV | REBGV Report | Recycle | Redevelopment | Regulations | Renfrew | Renfrew Heights | Renfrew Heights, Vancouver East Real Estate | Renovated | Renovation | Renovations | Rental | Report | Residential | Residential Building | Residential Sales | Restaurant | Restrictions | Retail | Retail Level | Retail Space | River District | Sale | Sales | Sales Report | Salmon River, Langley Real Estate | Savings | Selling | Sentinel Hill, West Vancouver Real Estate | Sequel 138 | Shaughnessy | Silk Building | Silver Valley, Maple Ridge Real Estate | Single Family | Single Storey | South Burnaby | South Granville | South Granville, Vancouver West Real Estate | South Vancouver | South Vancouver, Vancouver East Real Estate | Southeast Vancouver | Southlands, Vancouver West Real Estate | Statistics | Stats | strata | Strata Owner | Strathcona | Streetfront | Streetfront Retail | Suburbs | Summer | Sunnyside Park Surrey, South Surrey White Rock Real Estate | Supply | Surrey | Survey | Tax Savings | Taxes | Tech Space | Tenant | Tofino Real Estate | Townhomes | Townhouse | Transit | Two Storey | University VW, Vancouver West Real Estate | Update | Upgrades | Value | Vancouver | Vancouver East | Vancouver Housing | Vancouver Property Values | Vancouver Real Estate | Vancouver West | Vancouver West Real Estate | Vancouver] | Victoria | Victoria VE, Vancouver East Real Estate | Views | Water View | Waterfront | WeRentVancouver | West End | West End VW, Vancouver West Real Estate | West Vancouver | West Vancouver Real Estate | Westbank | Westender | Westside | Willoughby Heights, Langley Real Estate | Yaletown | Yaletown, Vancouver West Real Estate | YVR | Zoning