LEARNING CENTRE

Fixed Rate Mortgages

• A fixed rate mortgage gives you 100% confidence that your payments will not change for the entire length of your mortgage term

• Your mortgage payments are an equal amount every month

• Fluctuations in prime will not affect you. You do not have to worry about increasing mortgage payments to account for how the changing rates affect your payment to interest and principal. However, if interests rates drop, you will be paying more interest than those on a variable rate.

• Fixed rates offer you stability and consistency in payment amount

Variable Rate Mortgages

• A variable mortgage typically has a lower interest rate than a fixed rate mortgage.

• When the prime rate goes down, more of your mortgage payment will go to pay down principal. Conversely, when the prime rate goes up, more of your mortgage payment will go to pay down interest

• If variable interest rates rise higher than what your mortgage payment will cover in interest alone only payments, your bank may increase your mortgage payment or you could extend your amortization

• Historically, variable rates are less expensive