Variable Rate and Fixed Rate Mortgages

Fixed Rate Mortgage

Variable Rate and Fixed Rate Mortgages

Fixed Rate Mortgage

Fixed interest rate for the entire term lenght, meaning your payments stay equal every month. For example a 5 year fixed mortgage with 6.2% interest will stay at 6.2% interest for 5 years, without changes.

Variable Rate Mortgage

Has variable interest rate which changes every month. Interest rate may go up or down, affecting monthly mortgage payments. Interest rate is affected by Canadian economy and monetary policies set by the Bank of Canada.

Variable vs Fixed Rate Mortgage

• Variable mortgage has lower interest rate than fixed rate mortgage, but the rate may go up.
• Fixed rate mortgage gives you 100% certainty that payments will not change for entire mortgage term length.

Studies by Dr. Milevsky of York University have shown that between 1950 to 2007 one in seven Canadians who choose variable rate mortgage saved an average $20,630 on interest payments per every $100,000 over 15 year period, due to lower interest rates offered on variable mortgages.

Whether the variable rate mortgage or fixed rate mortgage turns out better depends on what happens to interest rates in the future, which no one knows. Ask yourself a question, is this the risk worth taking? Can I afford to?

Payments on a variable mortgage vary every month by around $20 and up to $250. If rates go down significantly, payments may decrease by an average of $100. If rates increase significantly, payments may go up by $100. Though you can save more, changing payments can cause a headache to your budget.

Fixed mortgage offers one stable payment which doesn't change.

Apply for fixed or variable rate mortgage today.

Mortgage interest rates are subject to change without notice. We attempt to maintain accuracy on our website, however, mortgage information on this website should be used only as a guideline. Please consult a mortgage professional before taking any action.