Variable Mortgage Rates Toronto - Certified Mortgage Brokers
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What Your Need To Know About Variable Mortgage Rates

Fixed Or Variable?

At Toronto Mortgage Brokerage you will be given the choice of a fixed or variable mortgage rate and depending on your situation one option may be better than the other. You can find more information on our fixed mortgage rate here.

Interest Depends On The Market

With a variable mortgage rate the amount of your payment is locked for your selected term, often a couple of years. However, although the payment is fixed, the interest rate on the mortgage will change with any fluctuations in the market rates. This means that if the interest rate goes down, more of your payment is used to pay off your principal and this lowers your overall costs. On the other hand, if the rates go up, a larger amount of your payment will go towards paying the interest costs and consequently this adds to your overall mortgage cost. The benefit of a variable mortgage rate depends largely on market rates.

Why Variable Rates?

A variable mortgage rate is typically associated with more risk and this isn’t completely untrue. The stability of the market is questionable and by choosing a variable mortgage rate there is both a possible benefit as well as a risk involved. With the help of our expert brokers you can make an educated decision with a reduced the risk factor.

Unlike with a fixed mortgage rate, variable rates remain low but you cannot be certain of the amount of your monthly payment.

Variable Mortgage Rates Toronto

Assess Your Paying Abilities

The first thing you should take into consideration when choosing a variable rate is whether or not you can afford to make payments if the rate increases. We can assist you in assessing your current income and the prospect of an increase in earnings. The second thing you must consider, after it is settled that you are financially prepared for possible fluctuations, is whether or not you are emotionally prepared. For some people, their personality does not have a high tolerance for risk and they prefer stability above all else. If you feel that rate changes will keep you up at night then it’s best to turn to a fixed mortgage rate instead.

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Take Advantage Of  Difference

The larger the gap between the interest rate on a fixed rate mortgage and a variable rate mortgage the more chance there is that you will benefit from a variable rate. If the difference between a fixed rate and a variable rate is within just a percentage, then it is better to choose a fixed rate and enjoy having a peace of mind.

Your income, lifestyle and risk tolerance will weigh heavily on your decision and will inevitably determine which product suits your circumstance.

With variable mortgage rates you also have the option of an open or closed mortgage.

Open Term Mortgages

It an ideal option if you plan on fully paying off your mortgage in the near future, considering of selling your home, want to prepay a significant amount, or think that rates will go down. An open variable mortgage rate allows to pay off the mortgage during the term, or switch to another term at any time without any additional charges. Being open allows you to put down as much as you want, or pay off the entire mortgage at any time. It also lets you change to another term at any time, without charge. Due to the prepayment flexibility that you receive, higher interest rates apply than for a closed variable mortgage rate for the same term.

Closed Term Mortgages

For a closed variable mortgage rate, payments are usually fixed for the term and this option is ideal if you don’t plan to pay off your mortgage in the near future. You can still choose to pay off your mortgage during the term but this will involve a prepayment charge. The interests rates are lower than in an open variable mortgage and you can convert your mortgage to a fixed rate term of the same length or longer.

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A 6093 Yonge St. Toronto, ON M2M 3W6

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