What does this mean for people looking for a mortgage, specifically – is a fixed or variable rate mortgage plan the better option? Unfortunately there is no concrete way to say which option is the ‘right option’ as each individual homebuyer must address his or her own personal needs rather than following remarks from economists.
Understand the differences between variable and fixed mortgage rates, which are most popular, and if a variable or fixed mortgage rate is most suitable for you. Bank of Canada affects Variable Rate Mortgages whereas Bond Market affects Fixed Rate Mortgages. One of the first decisions homebuyers and mortgage shoppers face is whether to select a fixed rate or variable rate mortgage. Both types of mortgages can be beneficial depending on many factors, including your current financial situation, your comfort level with fluctuating rates and your credit score. Learn more about your two options so you can make an informed decision.
Fixed Rate Mortgages:
Fixed-rate mortgages feature a set interest rate for the entire term of the mortgage. A fixed-rate Mortgage is a great option for those who:
- Prefer consistent monthly payments
- Plan to pay the mortgage over a longer term
- Follow a personal budget and enjoy the predictability that a fixed rate allows
- Qualify for a low interest rate and want to secure it for their entire mortgage term
- Expect interest rates to increase, and want to lock in a lower interest rate now
Variable Rate Mortgages:
Unlike fixed-rate mortgages, variable-rate mortgages (sometimes called adjustable-rate mortgages) do not offer borrowers one steady interest rate over the life of the mortgage. Fluctuates with the market interest rate, known as the ‘prime rate.’ Mortgage payments either fluctuate with fluctuations in the prime rate, or the interest portion of the payment varies.
Variable-rate mortgages are good for those who:
- Plan to keep the mortgage for only a short period of time
- Are confident that lower interest rates will become available down the road
Apply for a Fixed or Variable Rate Mortgages:
Carefully weigh your options when applying for a mortgage. Every situation is unique, so you will be the best judge of the type of interest rate you’re prepared to pay with the help of AKAL Mortgages Professional. If you’re comfortable with the variability of an adjustable-rate mortgage, that may be the right solution for you. If not, a fixed-rate mortgage would probably be a better fit. Keep in mind that with either a fixed- or variable-rate mortgage, you can pay a portion of the mortgage or the entire mortgage without penalty. No matter which you choose, you can work with AKAL Mortgages to find mortgage that meet your immidiate and future needs. Apply Online, Contact Us or call 647-846-8352 to speak with an AKAL Mortgages Professional.