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What is the difference between floating rate and fixed rate mortgages?

April 26, 2017fixed floating mortgages rate

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What is the difference between floating rate and fixed rate mortgages?

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Variable or floating rate mortgages provide that the interest rate will change on a periodic basis during the term of the loan according to a pre-determined formula. This formula is typically based on the prime-lending rate set by the Bank of Canada. Fixed rate mortgages provide that the interest rate will not change throughout the term of the mortgage, but is set at a fixed rate at the beginning of the term.