There have been a lot of government-imposed changes in the mortgage industry in the past two years. The Bank of Canada has also recently raised its key lending rate to a 10-year-high. (If you are counting, that is 5 rate increases since the summer of 2017). Combined, all of these changes are enough to have Canadians naturally become anxious about their current mortgage; especially if they have a variable rate mortgage (VRM). It might have some homeowners wondering if they "should stay variable or go fixed".
What is a Variable Rate Mortgage?
This type of mortgage product is based on the Bank of Canada's prime lending rate and therefore changes with market conditions. The interest rate is typically lower than those offered for fixed products; however, you need to take into consideration your risk tolerance if you are planning on this option as interest rates could change without warning. You are able to lock in a VRM to a fixed product at any time.
What is a Fixed Mortgage?
This product is based on bond futures and your payments do not increase for the term of your mortgage as your rate is "locked in", so you are protected from rate fluctuations. If, for whatever reason, you find that you need to get out of your mortgage before the end of your term, you could face a high penalty.
To Stay Variable or to Go Fixed?
We spoke to some of our knowledgeable Winnipeg Mortgage Brokers here at One Link for their take on that very question:
For current Variable Rate Mortgage Clients
For those planning to get a mortgage in the future
A final word...
With so many things to consider when it comes to choosing the right mortgage for your situation, be it variable or fixed, it pays to speak to someone who knows ALL the facts. This is where your One Link Mortgage Professional comes in. They understand the subtle differences between mortgage products and can provide you with options and solutions for your personal situation. Whether you are currently in a mortgage and questioning if it is still the "right fit" for you or if you are looking at getting a mortgage in the future and are researching your options, One Link is here for you.
Interested in finding out more about your home financing options? Give us a call today at 204-928-7722.