What’s the difference between a fixed and variable rate mortgage?

February 1, 2016

It is easy to understand the difference of a fixed versus a variable mortgage.

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Fixed Mortgage Rate: A fixed mortgage rate allows the home buyer to lock in a rate for the duration of the mortgage term, for example over a five-year term period. The advantage of the fixed rate is that your rate will not fluctuate and you can count on planning how much your mortgage payment will be for the duration of the term.

Variable Mortgage Rate: A variable mortgage rate means that the interest rate will change depending on the lender’s prime rate. For example, if your lender’s prime rate goes up or down, during the course of your mortgage term, your mortgage payment will reflect that difference in interest which will affect your mortgage payment amount.

 

 

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