Shorter terms may, however, be attractive if you believe interest rates will drop. Each time the Bank of Canada begins to shift interest rates, a shudder goes through us all. It signals another period of guessing, weighing borrowing needs against the prospect of getting caught in a credit squeeze. Nowhere is this more frustrating than with a mortgage decision. The Term to Choose The first thing to consider when choosing a term is what is most important to you.
Some people prefer the security of a longer term with both a fixed interest and payment.
Peace of mind is more important to them than the possible interest savings from a shorter term with the potential of renewing at a lower interest rate. When rates look as if they're on the way up, borrowers tend to go longer term to lock in the lower rate. But, if rates look stable or are expected to come down, it's natural to lean toward shorter term and the chance of a better rate later on. Essentially you should consider whether you can comfortably carry the payment on a higher rate mortgage if rates are higher when it's time to renew. A short-term rate can be attractive.