Variable Rate Mortgage

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3 Year 2.20 %
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Open mortgage rate plan – May help you save money in the long run

A variable rate plan is one in which the rate of interest is not fixed, and is based on the current prime rate. As the prime rate changes, the variable rate shifts downwards or upwards.

Variable rate is usually lower than the fixed rate, but can vary during the course of time. With rate flexibility, the payment amount is also subject to change over time.

The favorable term in variable rate is that you can pay off your entire mortgage balance at any time during the term. People opt for variable rate if they are certain to receive a lump sum in near future from any source (bonus, inheritance) to pay off their entire mortgage at the earliest.

Which is better – Fixed or Variable?

Fixed or variable – both types of mortgages are created to cater to different needs of customers. Therefore you need to evaluate your financial condition thoroughly for the current and future, to decide which one is better for you.

In a fixed rate, the customer is sure to pay a certain amount over the term, so it gives stability and peace of mind to manage finances accordingly. The negative factor to this option is that if you plan to pre-pay your mortgage in future, you will have to endure pre-payment penalties. Also, the total amount over the tenure may be much higher than the variable rate.

Variable rate is attractive as it is lower than the fixed, and also offers liberty to pre-pay the mortgage at any time. But due to prime rate fluctuation, the equated payment amount can become high over time.

According to the market trend, it has been witnessed that fixed rate is a more favorable option for people, as they look to have a fixed equated pre-payment option. More than 65% of people opt for fixed rate, which gives them peace to manage their finances accordingly without any hassle. Age-wise singularities evaluate that young people prefer fixed rate, while old people are more in favor of variable rate.