What Are Variable Rates vs Fixed Rates?
Two types of interest rates exist for mortgages – variable rates and fixed rates. Each carries a set of benefits. Therefore, it’s up to the homeowner to decide the approach that they prefer to take. Most homebuyers aim to obtain a conventional mortgage. It features a 30-year term with fixed rates. To qualify for this mortgage type, homebuyers must provide full financial documentation, a 20% deposit, and a stellar credit score.
Some homeowners like the predictability that fixed rates provide. For 30 years, their repayment will remain the same. Thus, they can automate it and not think twice about it. With variable rates, homeowners will see their repayments go up and down. The repayments start low. Then, they increase based on the market rate. Many individuals remember the chaos that the sudden rise in rates created in the 2000s. However, Mortgage House provides several tools that help offset the potential rise in rates. Plus, the potential to refinance a home loan exists without incurring penalties.
Refinancing a fixed-rate mortgage does not exist without penalties. Some homeowners have found that despite the penalties, they can still come out with more favourable mortgage terms.
To dig into the possibilities, we encourage homeowners to speak with our Mortgage House lending specialists.
Variable Rates and Fixed Rates Conclusion
When homebuyers apply for mortgages, they must make several decisions. In addition to picking the best type of mortgage, they must pick between variable rates and fixed rates. Our Mortgage House lending specialists help homebuyers make the right decision. Contact our team today.