You can at times anticipate a financial reward for going with a variable rate. Depending on the economic environment, the degree of the reward will ebb and flow.

Fixed-rate mortgages often appeal to clients who want:

  • Stability in their payments
  • Manage a tight monthly budget
  • Are generally more conservative

For example, individuals with large mortgages relative to their income often opt for fixed rates due to peace of mind.

A variable-rate mortgage often allows the borrower to take advantage of lower rates. The interest rate is calculated on an ongoing basis at a lender’s prime rate minus or plus a set percentage.

For example, if the current prime rate is 5.5% with a 0.5% discount, you would owe a 5% variable interest rate.

As a consumer, ensure you understand the risks and rewards of rate types with Nicole, your mortgage professional!