Fixed Rate Mortgages:

Secure a consistent interest rate and enjoy stable monthly payments. Ideal for those who value financial predictability and peace of mind.

Pros :
- Borrowers will know what their monthly payment will be each month
- Even if the market is uncertain,borrowers won't have to worry about their rates going up
- Easier to calculte the total cost of borrowing
Cons:
- If interest rates decrease because of the market, borrowers won't benefit
- To get a lower rate, borrowers would need to break the contract, which can cost money in fees
- Fixed rates may be higher than variable rates

Variable Rate Mortgages:

Interest rates vary with market conditions, resulting in fluctuating payments. Suitable for those willing to embrace some risk for potential savings.

Pros :
- Borrowers' monthly payments can decrease when interest rates go down
- Variable loan rates are typically lower than fixed loan rates, which is due to the risk borrowers take on
- Flexibility to switch to a fixed-rate if rates are anticipated to rise
Cons:
- Borrowers' monthly payments can increase if the market causes interest rates to go up
- Uncertainty due to fluctuating interest rates over time
- Possibly higher long-term cost if rates significantly increase

Which is better?

THE RIGHT CHOICE DEPENDS ON YOUR FINANCIAL GOALS, RISK APPETITE, AND LONG-TERM PLANS.

Remember that the interest rate is only one part of the total cost of a loan. You'll also want to consider other factors that contribute to the loan's affordability:

Alexander Gasenko, Mortgage Broker
DLC Maple Mortgage Group, Lic #13415

Sign up with

your email address

to receive news

and updates.

Subscribe