Fixed Vs. Variable Mortgage Rate
One of the first decisions a home buyer faces during the mortgage process is whether to choose:
> A fixed rate mortgage
> A variable rate mortgage.
The choice is not always an easy one. Also depends on the borrower’s risk tolerance as well as their financial ability to tolerate any increases in their monthly mortgage payments.
Fixed mortgage rates are great for clients who want: stability in their payments, manage a monthly budget, or are more conservative. With a fixed rate mortgage; the mortgage rate and payment you make each month will stay constant for the entire term of your mortgage.
A variable mortgage rate allows the borrower to take advantage of lower rates. With a variable rate mortgage; the mortgage rate will change with the prime lending rate set by your lender– the interest rate is higher or lower each time the prime rate changes.
For example, if the mortgage lenders’s current prime mortgage rate is 3.50%, and the borrowers mortgage is set at prime minus 0.50%. The borrower’s mortgage rate would be a 3.00% variable interest rate mortgage.
As a home buyer, the best option is to have a open discussion with your mortgage professional to ensure you have a full understanding of the risks and rewards of each type of mortgage. Our Interactive Mortgage Calculators will allow you to explore your mortgage options to make the right home financing decision.
Our Sunlite Mortgage agents will walk you through the choices available; and help you identify the most suitable mortgage product to your current situation. All while looking at your short and long term goals. Contact a Sunlite Mortgage agent today at 1.877.38LOANS and we will be happy to help you with a mortgage.