Variable Mortgage Rate VS Fixed Mortgage Rate. How To Identify The Pros & Cons, So You Can Make A Wise Decision?
–Posted By Mahmoud Hamdan (aka Mike)–
Licensed Mortgage Agent level 2. FSRA Lic # M09002218 since 2009. Brokerage: Mortgage Outlet Inc FSRA #12628
With a variable mortgage rate, your mortgage payment fluctuates throughout the term of your mortgage depending on where the prime rate is at.
With a fixed mortgage rate, your mortgage remains the same throughout the term of your mortgage. This could also provide more stability and peace of mind knowing you are staying within a fixed budget
But with recent changes to prime rate and unstable market conditions, people are finding it hard to continue with variable mortgage rates and some are even forced to break the loan before maturity and switch to a more feasible mortgage.
The question is, which fixed rate makes a better option?
While I can’t decide for you, I am happy to share my thoughts on the subject.
The best option perhaps is to go with a 3 year fixed mortgage rate. It’s not to long and it’s not to short. it’s somehow in between, so you are not stuck with the mortgage for a long time.
Ideally, you want to ensure the new mortgage combine the best rate and total flexibility with no bona-fide sales clause that restrict you from leaving the lender during the term in the event you decide to break the loan before maturity and switch lenders.
Need help comparing mortgage rates and options? Click here to compare best mortgage rates in Ontario.