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fixed vs variable interest rates

Fixed vs. Variable Interest Rates

Finding The Perfect Interest Rate For You

As a homebuyer and mortgage shopper one of your first decisions will be to choose either a fixed or a variable interest rate. Both types of rates have their benefits and downfalls, your selection should depend on what works for your personal situation. Qualifying for either will depend on your income, credit score and comfort level with fluctuating interest.

Take a look at our chart below and see where you fit in.

Fixed-Rate Interest

Variable-Rate interest

How your Mortgage Payment works: Your monthly payments stay the same for the entire mortgage term. Your monthly payments may change throughout the term.If rates go up significantly, your mortgage lender will notify you of the increase to your payment.
How the Interest works: Your interest rate stays the same for your mortgage term. Your interest rate fluctuates with changes in the Prime Rate that is set by the Bank of Canada.A variable rate will be quoted as Prime +/- a specified amount, such as Prime – 0.40%. Although the Prime rate can change, the relationship to prime will stay constant over your term.
Ideal for those who:
    • Follow a personal budget and enjoy predictability


    • Plan to pay out the mortgage over a longer term


    • Secure a low interest rate and want to keep it for the entire loan term.


    • Expect interest rates to increase in the near future


    • Plan to payout their mortgage over a short period of time


    • Their budget allows for an increase in housing costs


    • Are confident that lower rates will be available down the road


Key Benefits:
    • It’s clear how much of your payment goes towards principal and interest


  • You’ll know how long it will take to pay off your mortgage
  • Generally offers the lowest mortgage rate available

  • Could save you thousands in interest costs over the life of your mortgage

For more information on fixed vs. variable interest rates, or for advice on your personal situation Call our experts at 1-866-963-CMGC (2642).