Fixed Rate vs Variable Rate
Fixed or variable interest rate: which one to choose?
Choosing between a fixed or a variable rate is not always easy. That's why our mortgage brokers will help you make the right choice that’s also budget friendly. Thanks to their expertise, they make sure that you get the ideal product to live with ease and peace of mind.
When you apply for a loan for a property, you have two choices: a fixed rate loan or a variable rate loan. Since each has advantages and disadvantages, it is recommended to contact an expert to understand in detail what differentiates the fixed interest rate from the variable one.
When deciding between a fixed or variable rate mortgage, it's crucial to determine how long you'll be paying on your home loan. Interest rates for fixed mortgages remain near historic lows, so locking into a 30 year fixed rate mortgage will secure affordable repayments. However, if you're anticipating higher rates in the future, such as during an economic downturn or after financial markets begin rising again, then you should consider an adjustable-rate mortgage rather than locking in at one rate for the long term.
Fixed-rate mortgages are ideal for people who want to know their mortgage payments will be the same for the life of the loan. If that’s not you, or if you have a good idea of when you might break your mortgage, then a variable-rate mortgage may be a better fit.
What distinguishes the Fixed Rate vs Variable Rate interest ?
Fixed Rate vs Variable Rate as its name says, a fixed rate mortgage does not change during the term of the mortgage. Since it is stable and invariable, you will pay the same amount for all your payments. You will then be protected from market fluctuations and will be able to estimate your budget without any fluctuation. However, if rates decline during the term of your mortgage, you will not be able to take advantage of the market change.
As for the variable rate, it can change during the term of the mortgage because of economic fluctuations. This rate is generally lower than the fixed rate, since it is calculated according to the lender's premium rate plus or minus a set percentage. Compared to the fixed rate, you will most likely benefit from lower interest. This option is ideal when the market is favorable to low interest rates and a significant increase is not on the horizon.
If your plan is to stay in your home for many years, a fixed-rate mortgage might be best. A variable-rate mortgage can be more beneficial if you plan to sell in the near future and do not anticipate changes in interest rates. However, a variable-rate mortgage will allow you to lock into a lower rate if things change. If you are willing to accept some risk, this could be a good choice for you.
Fixed Rate vs Variable Rate a variable-rate mortgage is a type of mortgage that can change, or fluctuate, with the market. Because your rate will change over time, you’ll need to shop for the best possible rate when you first get the mortgage. You can compare the difference between fixed and variable rate by calculating your total interest paid over the life of your mortgage. If your lender gives you a temporary fixed-rate period where they won’t increase their rates during this stage then it’s often worth considering.
Fixed interest rate
Is the fixed rate interest for me?
The fixed rate is an excellent option for young couples, those who are less tolerant of risk and prefer stability and for those who have a smaller budget. If you identify yourself in one of these categories, you may appreciate the fixed rate. You will then be able to predict the amount of the payments, the paying back of the mortgage and the exact distribution of your payment between the principal and the interest. Everything will be established in advance, without you worrying about a thing!
A variable-rate mortgage starts at a low interest rate, but can go up or down over time depending on the economy. A fixed-rate mortgage has a starting interest rate that stays the same throughout the life of the loan. Because rates are likely to be lower in a low-interest rate environment, it’s possible a variable-rate Mortgage could save you money. But if you like knowing exactly what your monthly payments will be year after year, then a fixed-rate mortgage may be better for you.
Fixed Rate vs Variable Rate with a fixed-rate mortgage, you can look forward to a predictable monthly payment. The initial interest rate might be higher than with a variable-rate mortgage, but it’s worth it for the peace of mind that comes from knowing how much your payments will be and when you’ll pay off your mortgage.
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Call us today for Fixed Rate vs Variable Rate and get the best rate guaranteed. Contacting one of our broker is like meeting with over 20 financial institutions. Our Mortgage Broker will advise you in the steps leading to obtaining mortgage financing at the best rate.
Variable interest rate
Is the variable rate interest for me?
Variable-rate mortgages can save you money if interest rates are going down. But if rates are rising, the savings can be eaten away quickly and you may end up owing more than you originally were looking to borrow.
- You are risk tolerant
- Your budget allows you to withstand a possible increase
- You want a premium interest rate
A variable-rate mortgage can save you a lot of money in a low-rate environment. It’s not the better option if you like having the certainty of an unchanging payment. If you match this profile, the variable interest rate is probably a good option for you.
Type of mortgage
How to make the best choice?
To be certain that you make the best decision in the short and long terms, it is best to talk with a mortgage broker first. The Phenix team of the Dominion Lending Centers Phenix is an excellent resource to advise you between fixed and variable rates. After analyzing your situation, your risk tolerance and your needs, one of our mortgage brokers will recommend the most appropriate solution. In addition, he will explain in detail the risks and benefits associated with each type of mortgage.
