Fixed Or Variable Mortgage? - Outside the Numbers

When shopping for a mortgage most consumers are faced with the same agonizing question, should they go with a fixed mortgage or a variable mortgage. There are many key financial factors to consider including; income, debt, equity and assets just to name a few. Most of these can be measured and weighed to help you decide what is right for you. Unfortunately what really cannot be measured is the emotional strain that rising interest rates could have. Among financial advisors this type of emotional stress is often called the ‘pillow factor’ referring to how comfortable a client is with the ups and downs of the financial markets and it is one of the key components on how he will decide which investments you should select. This same factor comes into play when mortgage interest rates rise. You need to be aware of your personality type and risk tolerance.

Will You Be Emotionally Tied to Your Financing?

* If rates were to rise would it cause you to lose sleep and keep you up at night tossing and turning?
* Would you become worried and obsessed with rising rates where it might impact your enjoyment of life?
* Have you reacted poorly when you faced uncertain risk? Or are you the type of person that feels the need to be in supreme control over every detail of life?
* Would you consider yourself to be pessimistic?
* Are you a worry wart?
* Do you worry about problems or situations that may happen?

If you answered yes to a few of the questions above you may need to rethink that low variable rate mortgage or at least make sure that your debt, assets, employment and equity provide you with a safety net should the worst case scenario happen. It’s important to remember that poor emotional health over an extended period of time could lead to poor physical health and there is no price or savings that is more important than your health and happiness.

Visit Ontario Mortgage Loan for more straight forward advice on mortgages in Ontario, Canada.