Fixed or Adjustable Rate Mortgage?
Fixed Rate Mortgage
A Fixed Rate Mortgage is a loan based on an interest rate guaranteed for a specific amount of time. With a fixed rate mortgage, you are able to “lock in” the current interest rate and therefore your mortgage repayments will remain consistent for the duration of your mortgage term. This gives you the peace of mind that your mortgage payments will remain constant even when market conditions become unfavorable or Prime Rate increases.
Adjustable Rate Mortgage
Unlike fixed rates, an adjustable rate varies during the term of your mortgage. As a result, your mortgage payments will increase or decrease throughout the life of your mortgage. An adjustable rate mortgage offers you the ability to take advantage of potentially lower, short-term interest rates. With an adjustable rate, you have the potential to save money though interest rate savings and you can benefit from a lower rate if Prime Rate decreases.
An Adjustable Rate Mortgage can be converted to a Fixed Rate Mortgage at any time during the lifetime of your mortgage with MERIX Financial.
DescriptionFixed mortgage rate: Your interest rate and payments are fixed for the duration of the mortgage term.
Best forFixed mortgage rate: You prefer the peace of mind of predictable mortgage payments that are guaranteed not to change during the term of your mortgage.
ProsFixed mortgage rate: Simple to understand and the stability makes budgeting easier.
ConsFixed mortgage rate: Can be expensive. To take advantage of falling rates, you would need to refinance your mortgage.