Choosing the right rate for you
The choice between a fixed or variable rate should depend on your risk tolerance level as well as your ability to withstand increases in mortgage payments. A fixed rate mortgage offers more predictability over the term of the mortgage.
Aspects of Fixed Rate Mortgages
- Suits more conservative individuals who prefer or require stable fixed monthly payments
- Withstands interest rate fluctuations over the mortgage term
- Usually a higher interest rate
- Good for those that do not plan to sell or refinance in the short term
Aspects of Variable Rate Mortgages
- Suits less conservative individuals who can withstand fluctuations in interest rates over the mortgage term
- Usually are a lower interest rate
- Calculated based on the lenders' prime rate minus or plus a set percentage
- Good for those who plan to sell or refinance in the short term
- Good for investors who wish to take advantage of low interest rates