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Fixed Rate Mortgage
Fixed Rate Mortgages are offered from one to 10-year terms. This product provides you the comfort of knowing, with certainty, what your payments will be over the term you have chosen.
Variable Rate Mortgage
There are two different types of variable rate mortgages options.
For the first type of Variable Rate Mortgage option, your payment amount stays fixed for the term; however, the interest rate will fluctuate with any changes in bank prime interest rate. If the bank prime rate goes down, more of your payment will go towards paying off your principal. Conversely, if the bank prime rate goes up, more of your payment will go towards interest costs.
For the second type of Variable Rate Mortgage, your payment amount changes with prime. If the bank prime rate goes down, your monthly payment will decrease. Conversely, if the bank prime rate goes up, your payment will increase to reflect the higher interest rate.
Whether you are offered the first or second type of Variable Rate Mortgage option depends on the lender.
In addition, Variable Rate Mortgages can be Open term or Closed term:
Open term Variable Rate Mortgage: This mortgage option allows the borrower to cancel their obligation by paying off their mortgage at any time without penalty.
Closed term Variable Rate Mortgage: This mortgage option, offered by the majority of lenders, allows the borrower to take advantage of fluctuating borrowing costs. A lender will charge a payout penalty when the mortgage is paid out early.
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