When arranging home financing, your clients must choose a fixed or variable interest rate mortgage.
A fixed interest rate mortgage ensures that their rate will stay the same through the term of the mortgage. The benefit is knowing exactly how much their payments will be for the entire term, simplifying their monthly budget. If interest rates rise, they are protected from any increase for their selected term.
Variable rate mortgages generally offer lower rates than some fixed rate mortgages. The advantage, over time, is that your client could potentially pay off their principal balance faster, while saving on interest costs. Of course, variable rates can fluctuate over the term of the mortgage. Should rates increase, your client may be faced with higher payments that they did not budget for.
Because interest rates are difficult to predict, it's important to find the right mortgage solution to suit your needs. We always encourage our clients to speak with a qualified mortgage specialist. If you are not sure who to call, you can always call us and we will recommend a mortgage specialist.