I dont know much how these thing work therefore asking this question.
i can get a 2.10% 5 year closed variable mortgage rate through my bank vs. 4.15% 5 years fixed.
Of course 2.10% looks more attactive to me but i dont know what is the catch. I asked the bank but they always tell that I can pick any product and there are absolutely no strings attached. But i do know that both have some financial implications. which i dont know what are the implications. By the way bank is RBC.
i know there are some real knowledgeable people on this forum.
You are talkign about two things
Open vs Closed
Variable vs Fixed.
Open means you are not tied to a number such as 5 years.
Closed means you are locked into the mortgage for 5 years. There are penalties to get out of a closed mortgage. That is why sometimes open is beneficial. However you will usually get better rates on closed since you are locked in.
Variable and fixed is the interest charged. Fixed means just that it is
fixed for the 5 years you are locked in. So it could be 4.15%
Variable changes with prime. In your case you are offered prime minus 0.15. When the prime rate goes up so does interest.
Right now prime is at 2.25 i think, so if goes up to 4% your interest at that point would be 3.85%.
Variable historically has been better for people however lots of people lock into fixed for the security of knowing it wont go up.
don't confuse open and closed with fixed and variable. Fixed and variable are talking about interest rate options. Open or closed can apply to either. An open mortgage means it can be paid off at anytime without penalty. A closed mortgage means that even if you had the means to pay it off, there would be some penalty for paying it off early. Although most closed mortgages have good repayment options anyways, and typically come with better interest rate terms.
Edit: damn, too slow
IMO, interest is about to go up. Fix it for 5 years if you know you can commit to it.