In this Real Estate Video Mike Mullin Sales Representative for Royal LePage RCR Realty In Orangeville Ontario talks with Chris Little an RBC Mobile Mortgage Specialist.
Many first-time Orangeville homeowners do not know whether they should select a fixed or variable rate mortgage. Which one you select will determine how your payments change.
A fixed rate means that you have committed to specific loan terms and a specific rate of interest over a certain time frame. This is more secure and is considered favorable by many because the amount that you pay does not fluctuate even as the prime rate moves. The amount of principal and interest will always be the same.
For variable rate mortgages, the interest rate varies as the prime rate shifts. This can be an advantage if the prime rate decreases, because you will be able to pay more on your principal balance and less interest. However, when it goes up, you will chip away less and less mortgage and may pay only interest.