Last week I had the pleasure of meeting up with Jessi Johnson of the Jessi Johnson Mortgage Team to discuss the merits of a Variable Rate Mortgage versus a Fixed Rate Mortgage.
What is a variable rate mortgage?
This is a mortgage that has an interest rate that changes in line with the Bank of Canada’s prime rate.Variable rate mortgages tend to have a lower interest rate than a fixed rate mortgage, but the interest rate on a variable mortgage can change at any time.
What is a fixed rate mortgage?
A fixed rate mortgage has a set interest rate that does not change over the life of the mortgage. The interest rates for these mortgages are set by the international bond market. The interest rate (and the amount of interest paid) on a fixed rate mortgage tend to be higher than a variable rate mortgage.
Should I got for a Fixed or Variable rate mortgage?
That depends on what you value personally. If the possibility that your mortgage payments could increase drastically keep you up at night, then the certainty of a fixed rate mortgage might be the best option for you. If you’re comfortable with some changes in your mortgage payment and like the lower interest costs that are sometimes associated with a variable, then this mortgage might be the right product for you.
PLEASE NOTE ** I’d love to hear your thoughts and questions in the form of a comment below! **