When reviewing the terms for your loan, it is crucial to consider which rate system works best for you, a fixed-rate mortgage or a variable rate mortgage.
Variable Mortgage vs Fixed-Rate Mortgage Rate
What is a variable rate mortgage? This type of loan is essentially a mortgage with a rate that fluctuates based on the current market conditions. Those looking for a shorter-term agreement usually tend to opt for a variable interest rate as it can be a cheaper option in the long run.
What about a fixed-rate mortgage? Just as it sounds, a fixed-rate mortgage has a set interest rate for the entire duration of the agreement. We suggest going this route for those looking to make steady long-term payments.
Variable vs Fixed-Rate: Which is Better?
Determining which interest rate is better depends on your situation. Though the more risky avenue, a variable rate has proven to be more cost-effective in most cases. The market value rates do fluctuate, but your rate is more likely to go down than up. So why choose a fixed-rate? A fixed-rate mortgage is great if the market rates reach a very tiny number. In this case, having a fixed-rate is an attractive way to secure low payments throughout your mortgage. To find the right solution, we suggest having a detailed discussion with one of our mortgage professionals here at Mortgage Residence.
FAQs
Choosing between the two interest rates is an ongoing debate that varies from situation to situation. While variable rates tend to work for most scenarios, we suggest consulting with us to determine which rate works best for you.
A variable-rate has a fluctuating interest rate that is dependent on the current market value, while a fixed-rate mortgage carries the same charge throughout the term.
Based on current rates in Ontario, a good interest rate should fall between 1.5 – 2.9%. And we will help you attain just that.
A variable rate mortgage in Canada works on a term basis (for example, 1-5 years) while charging buyers an interest rate percentage based on market value. The rate can go up and down, which usually allows buyers to save money in the long-run. There is no guaranteed rate with the option, which tends to shy some buyers away.
If you are unsure of which loan rate works best for your financial situation, give Mortgage Residence a call today. Our team of mortgage experts will work closely with you to determine the best avenue that will save you money. We understand that every little bit counts when purchasing a new home, which is why we always strive to make mortgages more accessible for you.