Fixed Rate Mortgage — A Closed Rate Means Peace-of-Mind
“Lock-In” Your Rate With This Mortgage
A fixed rate mortgage is a traditional mortgage, in which the interest rate is fixed over the term of the loan. Compared to a variable rate mortgage whose interest rate may fluctuate, a fixed, or closed, mortgage rate is “locked in”.
A fixed mortgage rate can provide you with peace-of-mind knowing your payments will remain the same during the loan period. This type of mortgage is ideal if you are a bit risk-averse when it comes to investments, or if you believe that mortgage rates will be increasing in the future.
Open Vs Closed Mortgage — Which is Best for You?
When trying to decide on a mortgage strategy, you have many options to consider. Closed versus Variable rate.
A fixed rate mortgage is often chosen by a first time buyers, or risk adverse individuals. While a variable rate mortgage is chosen by more established buyers, who are more willing to take a chance on a variable interest rate.
What to expect with a fixed rate mortgage:
- Your payments will be the same, every month
- You might pay a slightly higher interest rate, compared to a variable rate mortgage
- If the Prime Rate goes up then you save, if it drops you “lose” those savings
What to expect with a variable rate mortgage:
- Your payments will be dependent on the Prime Rate
- You can expect a slightly lower interest rate, compared to a fixed rate mortgage
- If the Prime Rate goes up you pay more, if it drops you save!