Fixed Rate Mortgage:
- Provides a predictable payment amount for the term of the mortgage.
- Protects you against interest rate increases during the term of the mortgage.
- Typically has a higher interest rate compared to a variable rate mortgage.
- Generally recommended for those who want certainty and stability in their mortgage payments.
Variable Rate Mortgage:
- The interest rate fluctuates with the lender's prime rate, meaning your payments may vary throughout the term of the mortgage potentially save you money if interest rates decrease.
- Generally has a lower interest rate compared to a fixed rate mortgage.
- Generally recommended for those who are comfortable with some level of risk and are confident in their ability to handle potential payment increases.
It's important to consider your financial situation and long-term goals when deciding between a fixed or variable rate mortgage. If you are on a tight budget and prefer stability and predictability in your mortgage payments, a fixed rate mortgage might be a better option for you. However, if you are comfortable with some level of risk and have a flexible budget, a variable rate mortgage may be a good option, especially if you believe that interest rates may decrease in the future.
It's always a good idea to consult with a mortgage broker or financial advisor to discuss your options and help you make an informed decision based on your individual circumstances.