A common question is what's the difference between fixed and variable rate mortgages. Fixed-Rate Mortgages, your rate will stay the same for the term of the mortgage. The five-year term is the most common in Canada. Variable-rate mortgages your rate will go up or down with prime rate. What you secure is the discount off of prime rate. Historically, variable-rate mortgages have outperformed fixed rates. Two questions to ask yourself number one, do you want to set it and forget it? In this situation, fixed rates will be most likely be right for you. Essentially, what you're doing is paying a premium to secure your payment, historically averaging more over time. Number two, do you want the opportunity to pay less over the term? Variable-rate mortgages have averaged to be less expensive over time.
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