kind of a rant, kind of a WWYD

4 years ago we had to do a consumer proposal, 2 years ago we paid it off.

Our mortgage is up for renewal, we currently pay 2.5%, and our payments are 500 biweekly.

I got laid off at Christmas,   and with the current Covid we have no clue if or when I will be going back to work, My wive works in municipal cust service (not much chance of being laid off there).

Mortgage company gave us 3 renewal options 5 yr variable @ 4.7% $585 biweekly ,  5 yr fixed @ 4.9% $592 biweekly , and 1 year open @7.5% $734 biweekly.

Never missed a mortgage payment, electric bill, phone bill.

Mortgage broker cant get any other company to look at us due to the lay off.

Feel like I'm getting kicked while I'm down, we owe $236000 and the house is worth $436000.

My side hustle is strong, but I dont think Its strong enough to make up the extra $400 a month the one year is gonna cost, also Im unsure if all this crap is going to be sorted out in 1 year.

Should I/we suck it up and stick at the 5 year fixed?

Not looking for a magic bullet answer, but I do appreciate all the knowledge of this group.

Hope this isnt a ramble, my head is not in a good place at the moment.

Thanks folks

Man that is frustrating. I agree it's a kick while down. I hate the way mortgages are done in Canada; the US method of fixed for the life of the loan method is much better - we don't get to say that too much. 
 

I would be inclined to either of the 5 year options. If you think that your job situation will improve in the next few years you could do one of those with a refinance in mind; how does refinancing work in Canada? My thought is also that interest rates are unlikely to spike in the next few years so the 5 year variable might be ok. That depends on your comfort level. No way would I consider the 1 year at that rate. 

That definitely sucks. I'm sorry you're having to deal with that.  For the minor rate difference between the two, I'd be inclined towards the 5 year fixed...Then refinance if/when substantially lower rates become available to you. I don't know enough of how things are done there to understand what (if any) advantages the 1 year option would provide.

dculberson said:

Man that is frustrating. I agree it's a kick while down. I hate the way mortgages are done in Canada; the US method of fixed for the life of the loan method is much better - we don't get to say that too much. 
 

I would be inclined to either of the 5 year options. If you think that your job situation will improve in the next few years you could do one of those with a refinance in mind; how does refinancing work in Canada? My thought is also that interest rates are unlikely to spike in the next few years so the 5 year variable might be ok. That depends on your comfort level. No way would I consider the 1 year at that rate. 

I'm glad you pointed out OP is in Canada, because I was confused by the situation.

So do they reasses the loan every 5 years? 

In reply to z31maniac :

Quoting from here: https://www.latimes.com/business/hiltzik/la-xpm-2014-jan-16-la-fi-mh-canada-20140116-story.html

The standard mortgage in Canada isn’t the 30-year fixed, as it is in the U.S., but a five-year mortgage amortized over 25 years. That means the loan balance has to be refinanced at the end of five years, exposing the borrower to any increase in rates that has occurred in the interim. Prepayment penalties for borrowers hoping to exploit a decline in rates, on the other hand, are very steep. 

Thanks folks. 

Was frustrated beyond belief yesterday.