Fiorella Fromager

Locked in (Fixed Rate)
versus Variable Rate

Here are some points to help you "Choose What Works For You".

Mortgage rates are difficult to predict. If you are buying a new home, you may be wondering whether you should lock into a Fixed Rate or choose a Variable Rate (ARM) mortgage. Or if you have an existing mortgage that is at a Variable Rate should you lock in now at today's rates.

The best option for most people is to assess your personal situation and what you are comfortable with, rather than trying to decipher what the economic expectations are.

Locking In

When you opt for a Fixed Rate mortgage, the rate will be higher than a comparable Variable Rate product. However, since you are assured of the consistent "Fixed" interest rate for the chosen term of the mortgage, this can provide you with a comfort and confidence that you prefer. Even if interest rates are on the rise, your rate will remain the same for the term of the Fixed Rate mortgage. From the time that you lock in you will know, for your budget, what your payments will be and how much of the principal balance will remain when your mortgage term ends.

So, if fluctuating interest rates are going to keep you awake at night, then a Fixed Rate mortgage will be the best option for you and give you peace of mind.

Going Variable

For Variable Rate mortgages the interest rate is lower than for a comparable Fixed Rate mortgage, and this can be a very attractive option for you. Most Variable Rate mortgages are not open terms, however they usually offer you access to lock-in at any time at the Prime Rate minus or plus a set percentage. With some Variable Rate mortgages, as rates fluctuate so does the amount of your mortgage payments. With others, where there is a set mortgage payment, the portion of the payment that covers your mortgage principal will fluctuate. With set mortgage payments, when interest rates are dropping, your payments will pay down more of the principal of your mortgage and pay less interest. However; when interest rates do go up, your principal payment will be less and it may take you longer to fully pay for your home.

If you can still sleep at night with this option then the Variable Rate could save you money over the long term.

Your Choice

The decision to choose a Fixed or Variable Rate mortgage is as personal as choosing the home that's right for you. With most mortgages, if you wish to payout the balance before the mortgage term has ended, there would usually be a penalty added (commonly the total of three months payments or IRD interest rate differential...whichever is greater).

Call me, your vancouver mortgage broker, to obtain expert information to help you evaluate and to access the options that best suit your personal circumstances and priorities.

Fiorella Fromager AMP
Cell 604-209-8153

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Mortgage Rates

Fiorella Fromager

Locked in (Fixed Rate) versus Variable Rate

Locking In

Going Variable

Your Choice

Locked in (Fixed Rate)
versus Variable Rate