Variable vs. Fixed rate. Which is better for me?

Variable vs Fixed rate

When considering mortgage rates in Guelph the determining factor as to what will best suit you will be influenced by your income, your lifestyle and risk tolerance and they could be the deciding factors in choosing your product! The variable rate mortgage (VRM), or adjustable rate mortgage; has a certain appeal due to the interest rate being usually lower than a fixed rate mortgage.

However, one significant negative is the associated risk factor, which is that without any prior warning your interest rate could increase or decrease. They are influences that could affect your budget and lifestyle. There is one fast and painless method to determine if a variable rate mortgage is the right one for you. That is the simple question as to whether your budget could afford increases in the interest rate! On this track, you can begin by assessing your current income and the potential for increasing your earnings. Coupled with this are you able to withstand any adverse occurrences, such as interest rate increases or decreases?

Your option

The variable rate mortgage is calculated at prime rate minus. The risk factor comes into play here with mortgages at a variable rate, with the gains from them not being sufficiently significant for the financial risk involved. A fair guideline, especially for first-time homebuyers, is that when a fixed rate mortgage is within one percentage point of a variable rate, then your fixed option is the preferred one.

Historically, five-year fixed products have retained their popularity in Canada. However, due to the reduction and decrease in rates, some real estate buyers regard the decision of a fixed rate mortgage product as a natural course of action. If you require clarification, then some advice from your Guelph mortgage broker could be worth obtaining.

The budget

It is reasonable that the majority of people are not inclined to take unnecessary risks and first-time real estate buyers are generally just starting out on their family lifestyle. Because of this crucial factor they can be expected to choose a fixed rate mortgage as it means they have the capacity to budget for the complete period of their mortgage term.

At Mortgage Guys, we can help you find the best fixed rate mortgage option. Let our lenders find the best rates for your home mortgage needs. We are prepared to find the best deals in the industry so that you can pay less to own your dream home.