Mortgage Rates: Fixed versus Variable Rate Mortgages
Questions to Ask Before Choosing a Fixed Rate or Variable Rate Mortgage
Consider these strengths and weaknesses as you determine the right mortgage for your needs:
- How do you feel about risk? – Fixed rate mortgages are attractive to some home buyers because they limit risk. On the other side of the spectrum, variable rate mortgages offer attractive rewards in the form of lower interest, even if they are unpredictable. Determine if your budget can handle a 2 percent increase in interest and consider your personal feelings toward risk before deciding which type of mortgage is for you. You don’t want to choose a mortgage that will cause undue and avoidable stress.
- What are your conversion options? – Ask about your options for converting your mortgage between types. It can be useful to have a backup plan when rates begin to rise or fall, and having conversion options can give you this flexibility.
- How is your timeline? – If you have specific goals for paying off your mortgage in terms of time, the fixed mortgage may be the preferred option. Fixed mortgage is appealing because you know how much your payment will be and for a determined amount of time. With variable rate mortgage the interest rate is adjusted to reflect market conditions. Most lenders change the payments, raise and lower them according to rate changes, so that the amortization is not extended. As a result, when the payment increased, it covers the additional interest should rates go up. So although the timeline may stay the same the rate may fluctuate.
Contact the friendly professionals at Axiom Mortgage Solutions to learn more about the different mortgage options available to you and how they can support your financial goals. We can answer your questions and ask you more to ensure you get the perfect mortgage product. We have years of experience and can recommend the perfect fixed or variable rate mortgage in Leamington.
Are you ready to choose a mortgage solution for your next piece of real estate? Have questions or concerns? Want to learn more? Axiom Mortgage Solutions can find the perfect solution for you. Contact us today.