Deciding what type of rates you want is a major factor in the Burlington mortgage process. Depending on the type of personality you have, such as being a risk taker or not, can largely play a role in this decision. So, to help provide some guidance, our team at Loewen Group Mortgages have listed the key differences between fixed and variable rate mortgages.
Fixed Rate Mortgages
A fixed rate mortgage is an option for those who like to play it safe. Here you are given a loan that has a set interest rate and will not change throughout your loan’s amortization period (the time it takes your loan to get paid off). So, even if the market changes, you do not need to worry about rates changing. With this option, however, you typically have higher interest rates than other types of mortgages but you are given peace of mind. This option also allows for you to accurately budget since you will know exactly how much is owed every month and how long it will take you to pay it off in full.
Variable Rate Mortgages
This type of Burlington mortgage is one where your interest rates can vary depending on how the market is doing, so this is the option for you if you are more of a risk taker. Here, your monthly mortgage rates fluctuate with the market, so if you’re a betting man and believe the market is going to drop in the near future than you could reap the benefits of paying less on your mortgage than you originally intended if the rates drop. If the market changes and interest rates rise, then you could end up having to pay more every month then you had hoped.
Another benefit to variable rate mortgages is that they have a lower initial interest rate than a fixed rate mortgage, which is why this option is so appealing to new homeowners. However, this makes it more difficult for you to budget your finances accurately.
For more information on fixed and variable rate mortgages or to begin your application, please contact your local Burlington mortgage brokers, Loewen Group Mortgages, at 289-337-4029.