Note: Rates are current at time of posting and may be subject to change.
Fixed and Variable. No Problem!
When rates are at an all time low, existing wisdom tells you to lock them in while you can with a fixed rate. But its also tempting to pocket the interest savings by selecting the much less expensive variable rate mortgage.
There are pros and cons to both options. But if the question of rates has your head spinning – don’t worry! Today many mortgage lenders let you take both a fixed and a variable rate in one mortgage. This way your overall effective interest rate can be lower while you also get rate and payment security.
A fixed rate mortgage provides you the security of knowing what your rate, your payments and your mortgage balance will be for a specific term length. A variable rate mortgage provides you a discount off Bank Prime, and in the event Bank Prime moves up or down so will your effective rate of interest and the amount of your payment that is applied to principal reduction.
A variable rate mortgage provides a discount off Bank Prime, and in the event that Bank Prime moves up or down so can your effective rate of interest. Your discount off Bank Prime is specific to a term length and your early prepayment privileges are much more flexible and less expensive than fixed rate mortgage. Additionally, you can convert to a fixed mortgage rate from a variable at the prevailing fixed rates at any time during the term.
The downside of a variable rate mortgage is the changing nature of your mortgage rate and the impact this can have on your percentage of payment dedicated to repaying mortgage principal and your outstanding mortgage balance at the end of the variable rate term.
Speak to your Origin Mortgage Advisor about obtaining a fixed and variable mortgage product. He/She will be able to provide you with the effective rate of interest by splitting your terms.
An effective rate is an average of the best 5 year fixed and 5 year variable rates assuming you takes both in equal weightings.
*Rates and terms subject to change without notice.
