{"id":511,"date":"2022-11-18T07:30:41","date_gmt":"2022-11-18T14:30:41","guid":{"rendered":"https:\/\/jacksonyoung.ca\/?p=511"},"modified":"2022-12-02T16:09:12","modified_gmt":"2022-12-02T23:09:12","slug":"variable-rate-vs-fixed-rate","status":"publish","type":"post","link":"https:\/\/jacksonyoung.ca\/variable-rate-vs-fixed-rate","title":{"rendered":"Mortgages: Variable Rate vs Fixed Rate"},"content":{"rendered":"<p>[tcb-script id=&#8221;ratehub-chart-script&#8221; type=&#8221;text\/javascript&#8221; src=&#8221;https:\/\/www.ratehub.ca\/widgets\/chart.js?htmlid=ratehub_chart_ZM45&amp;series=best.5y-fixed+best.5y-variable&amp;hideLegend=0&amp;title=Mortgage+Intrerest+Rates&amp;xTitle=Year&amp;yTitle=Percent+%28%25%29&amp;lang=en&amp;start=1980-1-1&#8243;][\/tcb-script]<\/p>\n<p style=\"\">A variable rate mortgage means your interest rate changes along with movements in the prime rate \u2014 and your interest costs and mortgage payments along with it. Usually offered in a 5-year term, variable rates are often lower than 5-year fixed rates because the consumer takes on the risks from the Bank of Canada&#8217;s interest rate decisions.A fixed rate mortgage has a determined rate set from the beginning of your term (5-year length is the most common), and your payments stay the same until it&#8217;s time to renew. Often higher than a variable rate, a fixed rate will provide both interest and payment stability over your term. Here the bank takes on the risks from the interest rate fluctuations stemming from the Bank of Canada&#8217;s policy decisions, and gives the borrower a consistent payment amount.<\/p>\n<p style=\"text-align: center;\"><strong>Variable Rate Mortgage<\/strong><\/p>\n<p style=\"text-align: center;\"><strong>PROS<\/strong><\/p>\n<ul>\n<li style=\"\">Likely save more on interest over your mortgage term compared to a (higher) fixed rate<\/li>\n<li style=\"\">If rates go down, you&#8217;ll pay less interest for a budget break<\/li>\n<li style=\"\">If rates go up, you may still save more over a fixed rate<\/li>\n<li style=\"\">Lower penalties for breaking or switching (3 months interest vs Interest Rate Differential with fixed rate)<\/li>\n<li style=\"\">Historically, variable rates tend to outperform fixed rates for savings<\/li>\n<\/ul>\n<p style=\"text-align: center;\"><strong>CONS<\/strong><\/p>\n<ul>\n<li style=\"\">If rates go up, your payment can increase, affecting your monthly budget<\/li>\n<li style=\"\">If rates go up, you&#8217;ll pay more interest<\/li>\n<li style=\"\">Some variable rate products aren&#8217;t portable (transferable from a current property to a new one) if you sell the home during your term<\/li>\n<li style=\"\">You may worry more about rates rising during your term<\/li>\n<\/ul>\n<p style=\"text-align: center;\"><strong>Fixed Rate Mortgage<\/strong><\/p>\n<p style=\"text-align: center;\"><strong>PROS<\/strong><\/p>\n<ul>\n<li style=\"\">Rate is set for the duration of your mortgage term<\/li>\n<li style=\"\">Payments and interest won&#8217;t change, making it easier to budget<\/li>\n<li style=\"\">If rates go up during your term, you&#8217;re protected<\/li>\n<li style=\"\">Fixed-rate terms are usually portable (can go from current property to a new property)<\/li>\n<li style=\"\">You may feel more peace of mind if rates rise during your term<\/li>\n<\/ul>\n<p style=\"text-align: center;\"><strong>CONS<\/strong><\/p>\n<ul>\n<li style=\"\">Higher penalties for breaking or switching (Interest Rate Differential or 3 months interest, whichever is greater)<\/li>\n<li style=\"\">Historically, fixed rates are higher than variable rates, which may cost you more<\/li>\n<li style=\"\">If rates go down during your term, you&#8217;ll need to refinance or wait for your renewal to take advantage<\/li>\n<\/ul>\n","protected":false},"excerpt":{"rendered":"<p>Mortgage rates determine payment amounts, flexibility and directly affect a borrowers savings. The potential to save more with variable rates and stress less with fixed rates gives&#8230;<\/p>\n","protected":false},"author":2,"featured_media":512,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[27,28],"tags":[],"_links":{"self":[{"href":"https:\/\/jacksonyoung.ca\/wp-json\/wp\/v2\/posts\/511"}],"collection":[{"href":"https:\/\/jacksonyoung.ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/jacksonyoung.ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/jacksonyoung.ca\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/jacksonyoung.ca\/wp-json\/wp\/v2\/comments?post=511"}],"version-history":[{"count":12,"href":"https:\/\/jacksonyoung.ca\/wp-json\/wp\/v2\/posts\/511\/revisions"}],"predecessor-version":[{"id":539,"href":"https:\/\/jacksonyoung.ca\/wp-json\/wp\/v2\/posts\/511\/revisions\/539"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/jacksonyoung.ca\/wp-json\/wp\/v2\/media\/512"}],"wp:attachment":[{"href":"https:\/\/jacksonyoung.ca\/wp-json\/wp\/v2\/media?parent=511"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/jacksonyoung.ca\/wp-json\/wp\/v2\/categories?post=511"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/jacksonyoung.ca\/wp-json\/wp\/v2\/tags?post=511"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}