Navigating the Nova Scotia Downpayment Assistance ProgramHave you ever felt like buying a home was as daunting as climbing Mount Everest? You're not alone. The monetary challenges may seem to be too
Understanding Variable Interest Rates on Mortgages
Dated: February 18 2023
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When it comes to getting a mortgage, one of the important decisions you will need to make is choosing between a fixed or variable interest rate. In this blog post, we will be discussing the variable interest rate.
The variable interest rate fluctuates with the lender's prime rate throughout the mortgage term. This means that while your payment will remain constant, your interest rate may fluctuate due to market conditions. If rates on variable mortgages decrease, more of your payment goes towards the principal of your mortgage. On the other hand, if rates for variable mortgages increase, more of your payment will go towards the interest versus the principal.
The lender's prime rate determines the variable rate for mortgages. Variable rates are directly linked to the lender's prime rate, which is linked to the Bank of Canada's overnight lending rate. This means that variable rates are influenced by market conditions.
Is a variable interest rate mortgage right for you? It could be, if you are flexible with your budget, don't mind taking on the risk of potentially increased interest rates, and most importantly, want to pay your mortgage off quicker. However, it's important to speak to a qualified mortgage specialist to determine what type of mortgage best fits your situation.
Chris Crowell
- Bachelor of Commerce, Major in Marketing - Saint Mary's University 2007-2011 - Over ten years sales experience - Former district manager for Unilever Canada Atlantic territory (9yrs) - Using my prio....
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