Fixed vs. Variable Rate?
HELLO! I’m a fixed rate mortgage and I represent over 70% of the mortgages in Canada.
HI! I’m a variable rate mortgage and I can probably save you money!
Fixed Rate- Yes you might, but your interest rates and mortgages payments are subject to change and while they may go DOWN, but they may also go UP!
Variable Rate- Yes you are right about that – but studies have shown that if you have the risk tolerance to ride these ups & downs you can save money.
I also am very flexible in that you can convert to a fixed rate term at any time for no fee!
Fixed Rate- Yes but most people are too busy and don’t pay attention to the ups and downs of the market. All they want is the peace of mind of knowing what their mortgage payment will be each and every month.
Variable Rate - But there are some people who will take this risk in order to save money and pay down their mortgage faster. Variable rate mortgages are tied to your lenders prime rate which can be affected by changes in the Bank of Canada rate.
Fixed Rate- But you cannot forecast these rate fluctuations
Variable Rate- No I can’t – my crystal ball is still on order – however because our government will lower rates to spur on the economy, we tend to lean towards having lower rates more often than higher rates. – it takes three times longer to jump start the economy than it does to slow the economy.
Fixed Rate- You should also know that I come in a variety of terms. Although the 5 yr. is the most popular, I’m available for 6 months up to 10 yrs. and even longer
Variable Rate- Even though my rates may change everyone’s goal is to pay off their mortgage as fast as they can at the lowest rates they can get.
Fixed Rate– Confused…Here are some questions that you can ask yourself to determine which product would be better for you..
- • Are you financially and mentally equipped to handle fluctuating mortgage rates?
- • What is your tolerance for financial risk?
- • Are you knowledgeable and diligent in monitoring our economic climate?
- • Can you/will you react wisely to market fluctuations?
- • Do you value the peace of mind associated with fixed mortgage payments?
We will discuss your options, assess your risk tolerance, and help you make an informed decision.