Brockville Real Estate - Perth Real Estate Acreage
Verified on April 15th, 2010
Fixed interest rate for the entire term length, meaning your payments stay equal every month. For example a 5 year fixed mortgage with 6.2% interest will stay at 6.2% interest for 5 years, without changes.
Variable Rate Mortgage
Has variable interest rate which changes every month. Interest rate may go up or down, affecting monthly mortgage payments. Interest rate is affected by Canadian economy and monetary policies set by the Bank of Canada.
Whether the variable rate mortgage or fixed rate mortgage turns out better depends on what happens to interest rates in the future, which no one knows. Ask yourself a question, is this the risk worth taking? Can I afford to?
Payments on a variable mortgage vary every month by around $20 and up to $250. If rates go down significantly, payments may decrease by an average of $100. If rates increase significantly, payments may go up by $100. Though you can save more, changing payments can cause a headache to your budget.