{"id":555,"date":"2022-06-10T09:50:18","date_gmt":"2022-06-10T13:50:18","guid":{"rendered":"https:\/\/www.ratetrade.ca\/blog\/?p=555"},"modified":"2023-03-20T14:57:54","modified_gmt":"2023-03-20T18:57:54","slug":"variable-or-fixed-rate","status":"publish","type":"post","link":"https:\/\/www.ratetrade.ca\/blog\/variable-or-fixed-rate\/","title":{"rendered":"Canada Mortgage should you get a Variable or Fixed Rate? &#8211; RaterTrade.ca"},"content":{"rendered":"<p align=\"justify\"><strong>Canada Mortgage should you get a Variable or Fixed Rate? :\u00a0<\/strong>One of the first decisions you make when getting a mortgage is whether to go with fixed or<a href=\"https:\/\/www.ratetrade.ca\/\"> <strong>variable rates<\/strong><\/a>. It&#8217;s undoubtedly one of the most important decisions you&#8217;ll ever make. It will have an impact on your monthly payments, and it also has an effect on your mortgage&#8217;s total cost over time. It&#8217;s tempting to take the <a href=\"https:\/\/www.ratetrade.ca\/\"><strong>best mortgage rates<\/strong><\/a> you&#8217;re given.<\/p>\n<p align=\"justify\">But it isn&#8217;t that easy. Both forms of mortgages have advantages and disadvantages, which is why you must understand the differences between <strong>fixed-rate and variable-rate mortgages<\/strong>. This should be done before making a decision.<\/p>\n<h2 align=\"justify\"><strong>The Definitions<\/strong><\/h2>\n<h3 align=\"justify\"><strong>Fixed-Rate:<\/strong><\/h3>\n<ul>\n<li style=\"list-style-type: none;\">\n<ul>\n<li>Your rate is locked in for a set time known as the term (usually 1,2,3,4, or 30-year mortgage rates<\/li>\n<li>The interest rate is usually a little higher. The mortgage broker ensures a stable and <strong>regular mortgage payment<\/strong> for years to come.<\/li>\n<li>You may be subject to a higher penalty if you default on your mortgage. It is known as an Interest Rate Differential Penalty.<\/li>\n<li>It is impossible to convert a <strong>fixed-rate mortgage to a variable rate<\/strong>. It is without defaulting on the loan.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<h3 align=\"justify\"><strong>Variable Rate:<\/strong><\/h3>\n<ul>\n<li style=\"list-style-type: none;\">\n<ul>\n<li>The rate floats or changes over time as the Bank of Canada makes decisions.<\/li>\n<li>The rate is calculated by subtracting a discount from the Prime Rate (ex. Prime minus .50 percent).<\/li>\n<li>The variable rate is usually lower than the fixed rate. It might float higher for short periods.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<p align=\"justify\">In 2022, should you choose variable or fixed refinance rates? Which is the best option for you?<br \/>\nWe&#8217;ll look at the following to see if we can figure it out:<\/p>\n<ul>\n<li style=\"list-style-type: none;\">\n<ul>\n<li>The distinction between variable and fixed mortgage interest rates.<\/li>\n<li>There are five reasons why a variable rate could result in more savings now and in the future, including:<\/li>\n<li>Long-term historical evidence of variable rate cost savings.<\/li>\n<li>Why will the variable-rate be subject to upward restrictions, and what might these limits be?<\/li>\n<li>How to reduce the risk of having a variable rate mortgage.<\/li>\n<li>Compared to fixed rates, variable rates give more flexibility and lesser penalties.<\/li>\n<li>When to lock in fixed current mortgage rates.<\/li>\n<li>For many people, a fixed-rate mortgage is still the best option.<\/li>\n<li>Examine the advantages of a fixed rate for two to three years.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<h3 align=\"justify\"><strong>Is it better to have a variable-rate mortgage or a fixed-rate mortgage?<\/strong><\/h3>\n<p align=\"justify\">It would be best if you were not concerned about the financial risk of a variable-rate mortgage in an environment with low-interest rates. In this scenario, a variable-rate mortgage might be a better option because the rate will almost certainly be lower than a fixed-rate mortgage, and it has the potential to save you much money.<\/p>\n<p align=\"justify\">If you prefer the security of knowing your mortgage payment will not change, this is the option for you. It doesn&#8217;t matter if mortgage rates climb or lower; a fixed-rate mortgage is the best option for you.<\/p>\n<h3 align=\"justify\"><strong>Which of the mortgage rates is the most popular?<\/strong><\/h3>\n<p align=\"justify\">Approximately 60% of our clients choose a<strong> 5-year fixed-rate mortgage<\/strong>, which compares to 30% for a variable one. The rate has been fixed for decades, ensuring that your <strong>mortgage payments<\/strong> will not fluctuate for the next five years. It gives you time to establish a payment schedule, and you know exactly how much of your principal is being paid down. A 5-year fixed rate is also a popular word among banks, and it frequently has the most acceptable value.<\/p>\n<h3 align=\"justify\"><strong>So, what is the best mortgage rate for you?<\/strong><\/h3>\n<p align=\"justify\">Three questions may influence your decision:<\/p>\n<ul>\n<li style=\"list-style-type: none;\">\n<ul>\n<li>Can you get a good night&#8217;s sleep? This is after learning about the dangers of mortgage rates today.<\/li>\n<li>Is your budget ready for a 3\u20134% hike in your mortgage rate? If prime rises sharply, this is the case.<\/li>\n<li>Do you intend to sell your home in the next three years?<\/li>\n<li>Do you want to pay off your mortgage faster?<\/li>\n<li>To save more or to relax?<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<p align=\"justify\">We can assist you in obtaining the best possible<a href=\"https:\/\/www.ratetrade.ca\/\"><strong> mortgage rates in Ontario<\/strong><\/a>. We&#8217;ll figure out the <strong>best mortgage rates in Alberta<\/strong> for you. There is no cost or commitment to participate, and give us a call.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>One of the first decisions you make when getting a mortgage is whether to go with fixed or variable rates. It&#8217;s undoubtedly one of the most important decisions you&#8217;ll ever &#8230;<\/p>\n","protected":false},"author":1,"featured_media":671,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[14],"tags":[230,229,286,227,212,228,203],"class_list":["post-555","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-mortgage-rates","tag-5-year-fixed-rate-mortgage","tag-best-mortgage-rates-in-alberta","tag-fixed-rate","tag-fixed-rate-mortgage-to-a-variable-rate","tag-mortgage-payments","tag-mortgage-rates-in-ontario","tag-variable-rate"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v26.3 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Canada Mortgage should you get a Variable or Fixed Rate?<\/title>\n<meta name=\"description\" content=\"One of the first decisions you make when getting a mortgage is whether to go with fixed or variable 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