Variable and Fixed Rate Mortgages

Wednesday, December 01, 2021

Fixed Rate Mortgage:A fixed rate mortgage offers you security in locking in your interest rate for the term of your mortgage. This means that payments are set at the start of the terms allowing you to know exactly how much your payments will be throughout.Fixed Rate Mortgages are usually closed...A closed rate mortgage means that you will pay a penalty to exit the mortgage

Variable Rate Mortgage: A variable rate mortgage offers you more flexibility. Although your mortgage payments are set for the entire term, interest rates may fluctuate during that time. If interest rates go up, more of the payment is applied to payment of interest, if interest rates go down, more of the payment is applied to reduce the principal. Variable rate mortgage Advantages & Disadvantages:

Advantages:- Monthly mortgage payment and interest rate is usually much lower than the fixed rate mortgage.- A variable rate can be converted into a fixed rate, usually penalty free.- A significant advantage is a lower penalty for breaking a variable rate mortgage.

Disadvantages:- Financial uncertainty due to interest rate fluctuations- Can create a sense of instability for the homeowner

Fixed rate mortgage Advantages & Disadvantages:

Advantages:- Gives stability and consistency to the homeowner- Your loan payment will always be the same

Disadvantages:- The fixed rate is usually higher than the variable rate- The penalty for early repayment of a fixed rate mortgage can sometimes be much higher than the variable rate mortgage- Cannot be converted to a variable rate mortgage

If Interest rates appear likely to go up or down, that may affect your choice between fixed and variable rates.

Let me help you asses what the best mortgage product might be for you in regards to the type, term, and amortization to suit you best.I thank you for supporting my business this year and the greatest compliment you can give me is a friend or family referral that may be looking for a mortgage as well!

I hope you all have a relaxing and enjoyable holiday!Merry Christmas and Happy Holidays!