What’s the difference? Fixed vs. variable mortgage rates.

With a fixed rate mortgage, your payments and interest rate stay the same for the term of your mortgage. Every time you make a payment, the same amount goes towards the principal. Fixed rate mortgages provide consistency, allowing you to easily budget. Unless you make extra payments, you know exactly how much principal will be left at the end of your term.

With a variable rate mortgage, your payments stay the same for the term of your mortgage, but the interest rate changes with market fluctuations. When interest rates drop, more of your payment goes towards your principal. When interest rates rise, less of your payment goes towards your principal. A variable rate mortgage can potentially save you a lot of money in interest, but you are subject to interest rate changes you can’t predict and you won’t know exactly how much principal will be left at the end of your term until you get there.