Mortgage Options: Understanding Fixed vs Variable Rate Mortgages
Choosing mortgages that's right for you is a big decision, and it's one that you can make with the help of a mortgage professional. By better understanding the different mortgage options available you'll be better informed before you begin the decision process. There are variable and fixed rate mortgages, and each of them has their own advantages and disadvantages.
Advantages of a Fixed Rate Mortgage:
1. Consistent payments for the term of your mortgage - your monthly payment doesn't change until the end of your fixed period. You never have to worry about lack of affordability and can stick to a reliable budget.
2. No impact from rising interest rates - with a fixed mortgage, it doesn't matter whether rates increase during your fixed term. Current rate will only affect you when it comes time to renew.
Disadvantages of a Fixed Rate Mortgage:
1. You can pay more than the current posted interest rate - interest rates can fall lower than your fixed rate, but on a fixed rate mortgage, you can't take advantage of them.
2. You always pay more than the standard variable rate - you pay more to get the advantage of consistent, fixed payments.
Advantage of a Variable Rate Mortgage:
1. You always pay the base interest rate - following a base interest rate means that you have a lower monthly payment when rates fall.
Disadvantages of Variable Rate Mortgages:
1. Your monthly payments can increase - if interest rates rise, it's possible that your payments will increase substantially.
Before settling on the type of mortgage that's right for you, discuss the options with a mortgage professional.
By: Ginette Pelletier
Did you find this article informative by Ginette Pelletier. She is an Ontario mortgage agent for the Mortgage Centre in Mississauga, Ontario. She can help you with your mortgage needs in the Brampton, Collingwood, Barrie, Wasaga and all of Ontario. She can help you facilitate any of your mortgage needs. Visit her site today for the best mortgage rates for your needs. http://www.gpmortgages.ca/