What are the Pro’s & Con’s to a Fixed Vs Variable Rate?
Author:
Boychuk Mortgage Group
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- Fixed Rate Mortgage Pro’s
- Fixed rates give the borrower the certainty of a static payment each month.
- In a rate rising environment, your payment will not move.
- Fixed Rate Mortgage Con’s
- Fixed rates are less flexible & result in larger penalties if you break your mortgage
- Once you choose a fixed rate mortgage, you cannot move over to a variable
- Variable Rate Mortgage Pro’s
- Variable mortgages will provide borrowers with the most flexibility.
- A variable mortgage payment may go up, but it can also go down
- A variable mortgage rate is typically offered at a lower rate than fixed
- The variable rate mortgage has historically outperformed the fixed rate mortgage
- Borrowers can qualify for more typically in a variable mortgage
- Once you choose a variable rate mortgage, you move over to a fixed anytime
- Variable Rate Mortgage Con’s
- A variable mortgage payment may go down, but it can also go up
- Variable rates are a little more complex as the rate is based off of the prime rate
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