Are you confused about the difference between fixed and variable rate mortgages? Don't worry. You're not alone.
Deciding what type of mortgage works best for you is a critical step in the home ownership process. When deciding between a fixed or variable rate mortgage, you'll need to decide which one works for your lifestyle and how comfortable you are with the fact that your interest rate could change during the term of your mortgage.
But, before you decide, it's important to make sure you truly understand the difference between the two. Here are a couple key points that help explain the difference:
Fixed rate mortgages
- Fixed rate means your interest rate is locked in for the term of your mortgage.
- Regardless of whether interest rates go up or down, your rate won't change, and neither will the amount of your principal and interest payments.
Variable rate mortgages
- Your rate is based on the TD Mortgage Prime Rate, which can fluctuate or vary throughout the year.
- The rate you get when you first sign your mortgage can go up and down over the term of your mortgage. If the bank's prime rate goes down, more of your payment will go towards the principal. On the other hand, if bank's prime rate goes up, more of your payment will go towards interest.
Knowing what to anticipate can help you feel more confident about your home ownership journey. Speaking to a Mortgage Specialist can help give you a clear picture of the facts and help you figure out what type of mortgage is best for you.
To learn more about mortgage rate options, visit TD Mortgages.