Whats the difference between a fixed rate mortgage and a variable rate mortgage?
With a fixed rate mortgage, you lock-in your mortgage interest rate to a specified rate for a term ranging from 6 months to 10 years. Your payments stay the same over this time, and you don’t have to worry about fluctuations in your interest rate. With a variable rate mortgage, your mortgage interest rate is based on the Bank Prime rate (which is the base interest rate from which the Bank sets all the rest of its interest rates). Your interest rate will fluctuate as the Bank Prime goes up and down, although your regular mortgage payments will stay the same (unless the amount of your payment isn’t enough to cover the interest). You can choose a term of 3 to 5 years for a variable rate mortgage. You can convert a variable rate mortgage to a fixed rate at any time during your term without additional cost.
