To split or not to split?
May 8, 2009 12:31 PM Subscribe
Is a split term mortgage a good idea?
posted by bluefrog to work & money
I currently have 3.5 years left on my current mortgage (200K+) from bank B. My regular bank (bank A) has offered me a much lower rate split 50/50 between a 1 year and a 4 year mortgage, rather than a single fixed term mortgage. Conditions are such that the penalty to bank B for early repayment is not an issue at the moment.
Question: what are the benefits or drawbacks of such a split term mortgage? A mortgage broker (with no direct interest in the case) has told me that it's a bad idea, since I will lose a lot of bargaining power when time comes to renew these smaller mortgages. Is she right?
I live in Canada, BTW, if this makes any difference, and the property is a duplex (one rental income)