Confused about which mortgage rate to choose? Our team at Hopewell is ready to assist you with every stage of the homebuying process. Right now is a great time to go with a Fixed Mortgage Rate, but the Variable Rate has proven to be the better option historically because of its flexibility.
A Variable Mortgage Rate changes over time, based on decisions from the Bank of Canada. The variable rate is determined using a discount off the Prime Rate and is statistically shown to cost less than a fixed mortgage rate. Typically, the variable rate is lower than the fixed rate but can float higher for periods. The penalty is lower for breaking this type of mortgage and you can lock in your rate by switching it to fixed rate without breaking the mortgage. We recommend you take advantage of a lower starting rate whenever possible!
A Fixed Mortgage Rate locks in your rate for a predetermined amount of time. The set rate offers stability, but the rates are typically higher than a variable rate. There is a large fine called an Interest Rate Differential Penalty for breaking this type of mortgage during the first three years. A fixed rate mortgage cannot be switched to a variable rate without breaking the mortgage. As fixed rates can be lower than variable, selecting them can be beneficial at certain times to qualify for a mortgage.
Still have questions? Hopewell has partnered with mortgage specialists in Edmonton and Calgary who are ready to assist you. Our Calgary partner, Troy Champ, can be reached at troy@mortgagetree.ca or 403-615-9414. In Edmonton, please contact Dawne MacPherson-Mindus at dawnemacpherson@invis.ca or 780-278-3682.