5.2.9 Fixed or variable interest rates
- 5.2.1 What is a mortgage?
- 5.2.2 Down payment
- 5.2.3 Pre-approval
- 5.2.4 Home Buyers Plan
- 5.2.5 Amortization and term
- 5.2.6 Types of mortgages
- 5.2.7 Interest rates
- 5.2.8 Payment types
- 5.2.9 Fixed or variable interest rates
- 5.2.10 Video: Mortgage basics
- 5.2.11 Quiz: Mortgage terminology
- 5.2.12 Case study: Mortgage costs
- 5.2.13 Your mortgage payment
- 5.2.14 Payment options
- 5.2.15 Case study: Financing a mortgage
- 5.2.16 Summary of key messages
There are a few factors to consider when choosing between a fixed and variable interest rate mortgage:
|A fixed interest rate mortgage may be better for you if:
|A variable interest rate mortgage with variable payments may be better for you if:
|A variable interest rate mortgage with fixed payments may be better for you if:
Studies have shown that the majority of borrowers with variable-rate mortgages save money in the long term, but that some borrowers pay more. In other words, you can potentially save money, but there is a risk that your interest costs will be higher. In each case, you have to make a choice based on the length of the loan agreement, the current interest rate and the likelihood that the rate will increase or decrease during the life of the loan.
Specific mortgage provisions vary from one lender to another. They are explained in the written mortgage agreement, but you can ask the lender to explain exactly how the provisions work. Compare agreements between different lenders to find the best arrangements for your needs.
To review these mortgage terms, see the video Mortgage basics.
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