When is the best time to take out an adjustable rate mortgage loan?
Variable-rate mortgages are quite flexible and usually have lower interest rates than other types of mortgages. A variable-rate open mortgage is probably the best choice if you want to pay off the mortgage as quickly as possible, have the income available to do so, and the interest rates remain low or are expected to fall over a period of several years. They can be risky when the rates are fluctuating or if they are expected to increase for the forseeable future, a situation that exists today (spring 2006). I recently converted my variable-rate open mortgage to a fixed-rate closed mortgage because the interest rates have been increasing every quarter and our household income is temporarily reduced. Although we were able to pay off some 25% of our mortgage balance over an 18 month period, locking the mortgage in for five years has allowed us to reduce our payments to suit our changed income and protect ourselves from further increases in the mortgage rate. Rates are expected to increase
