What Is Fixed & Variable Mortgages?

A fixed rate mortgage is a mortgage where the interest rate is set for the entire term of the loan. A variable rate mortgage is a mortgage where the interest rate can change over time.

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What Are The Main Differences Between Fixed Rates and Variable Rates

Fixed and variable rates mortgages are two different types of home loans. Fixed rate and variable rates both have advantages and disadvantages for homeowners so you need to be well informed before making a choice between them. With that being said, many mortgage lenders have different rates and terms for both variable and fixed rate mortgages so your best bet is really comparing mortgage rates and key differences between the two.

Min differences of fixed vs variable rate mortgages
What is a fixed rate and how can it be a good mortgage choice

What Is A Fixed Rate?

Fixed rate mortgage is when the interest rate you pay will stay the same for your entire loan term. Fixed rates are generally lower than variable, which makes them popular with homeowners.

Most loans require borrowers to make monthly payments of principal and interest. Fixed-rate mortgages, however, require monthly payments that cover both principal and interest. Fixed rates are ideal when you plan on staying in your house for a long time because the lower rate saves you money over the life of the loan. The great thing about a fixed rate is that your mortgage payments will stay the same over the duration of your loan.

Pros And Cons Of A Fixed Rate

  • The prime advantage of having a fixed rate mortgage is that your monthly payments and interest rate will stay the same during the entire duration of your mortgage term.

  • The disadvantage of a fixed rate mortgage is that the interest rate is usually higher than a variable rate mortgage. As well there is a higher prepayment penalty for fixed rate mortgages.

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pros and cons of fixed mortgage rates

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What is a variable rate mortgage and how it is a good option

What Is A Variable Mortgage Rate?

Variable rate means your interest rate changes according to market conditions. When rates are low, your interest rate is lower, when rates are high, it’s higher.

Variable-rate mortgages have a fixed period of time when payments stay at a constant level. Variable rate loans generally reset every month or year depending on the type of mortgage you choose. Unless otherwise stated in your loan agreement, most variable rate loans adjust to current market rates every month.

 

variable rate mortgage BC

Getting a variable rate mortgage in BC, it gives you the ability to take advantage of fluctuations in interest rates. This type of loan offers a lower initial rate, which can save you money up front but has the potential to adjust over time.

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Integrum Mortgage, Mortgage brokers can help borrowers find the best mortgage product for their needs. We have access to several lenders including credit unions, so we can compare different products and advise you on which is the most suitable one. Integrum mortgage,  Mortgage brokers can also negotiate terms with lenders to get better rates and more favorable repayment options. Some of our mortgage brokers even assist with paperwork and other aspects of the home loan process.

Pros And Cons Of A Variable Rate Mortgage

  • Usually at the beginning of your mortgage for a specified time, the interest rate is lower. After the initial specified time, the rate will fluctuate according to the terms of the mortgage.

  • First time home buyers can more easily qualify for a variable rate mortgage. because the initial monthly payments are generally lower than a fixed rate mortgage.

  • Disadvantages of a variable rate mortgage is that it does not offer as many protections as a fixed rate. Variable rates can go up as well as down, which means it’s more difficult to budget your monthly payments and interest rate.

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