Mortgage Blog

Everything about Variable vs Fixed mortgage rate

March 7, 2024 | Posted by: Sarabjit Dhuna

You have two options for mortgages after you purchase home.
1. Fixed Mortgage rate
2. Variable Mortgage rate

Fixed Mortgage: - your mortgage payment, interest rate and length of the mortgage is already fixed when you opt for this option. Interest rates are often higher than variable.

Variable Mortgage: - your interest rate will change as per your lender’s prime rate. Mortgage payment will be the same throughout the term.

Pros and cons of Fixed Mortgage rate and Variable mortgage rate: -

Advantages of Fixed mortgage: -

• 3. You may feel peace of mind if rates goes up
• 4. It's easy to manage budget when you have fixed mortgage

Disadvantages of fixed mortgage: -

• 1. Usually, interest rate is higher than variable mortgage rate
• 2. You have to pay more penalties if you break or switch
• 3. If interest rates go down then you have to wait or refinance

 Advantages of Variable Mortgage: -

• 1. Interest rate is usually lower than fixed mortgage so you save more
• 2. If interest rate goes down than you pay less
• 3. You have to pay less penalties if you break or switch compared to fixed mortgage

 Disadvantages of Variable Mortgage: -

• 1. If interest rate goes up then you have to pay more
• 2. Less money will go to mortgage payment so, amortization period will be longer.

Can you change From Variable to fixed Mortgage

• Yes, you can change from variable to fixed mortgage when the term ends.

Variable Mortgage or Fixed Mortgage? Which one to choose

• It depends on you. Some of the people want to take risk and wants have maximum saving if this trait applies to you then variable mortgage is for you
• Some of people wants to have peace of mind and sleep peacefully and don't want to take risks then fixed mortgage is for you
• Still undecided? Get in touch with Sarabjit and I will help you to choose which is best for you.

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