Choosing a fixed rate term or a variable rate term is undoubtedly one of the most important financial decisions you and your family will make.
During our Client Experience conversations, we often share the #1 advantage of a fixed rate – peace of mind, knowing that the interest rate will never change and your payment will remain the same.
The down side is that you will not be able to take advantage of a lower interest rate and save on over all interest costs. The second disadvantage is that if you should need to open your fixed term contract early, your penalty could be nine times greater than if you had selected a variable rate term.
The #1 advantage of selecting a variable rate term is the ability to save on overall interest cost over the life of your mortgage. (for more information, check out our separate article “The Variable Rate Advantage”).
Another attractive advantage for choosing a variable rate term is that in the event you need to open your contract prior to the renewal date, the penalty is limited to three months of interest.
For a homeowner living in Walnut Grove, Langley, BC selecting a fixed rate or a variable rate term still requires passing the B-20 Stress Test. We recommend using our mobile Mortgage App to determine how the test could impact your final decision.