Mortgages 101: Three things you need to know about fixed vs. variable mortgage rates

Whether you're renewing your mortgage or stepping into the market as a first-time homebuyer, your mortgage will be one of the biggest decisions, both personal and financial, that you make in your life.   

For many Canadians, choosing the right mortgage structure can be challenging. If you find yourself as one of the many people asking yourself the question "What's the difference between fixed and variable rate mortgages?" we've put together a handy cheat sheet to help as you begin making the decision about which mortgage is the best fit for you.

Three things to know about fixed rate mortgages:

  1. Fixed rate means your interest rate is fixed for the entire term of your mortgage.
  2. Regardless of whether interest rates go up or down, your payments won't change and neither will the amount of your principal and interest payments.
  3. If you're someone who prefers stability and are concerned interest rates may rise, a fixed rate mortgage may be a better option for you. 

Three things to know about variable rate mortgages:

  1. Your rate is based on the bank's prime rate, which can fluctuate or vary throughout the year.
  2. The rate you get when you first sign your mortgage can go up and down throughout the term of your mortgage, meaning that how much you repay to your principle vs. your interest can change throughout the year.  
  3. If you can tolerate some unpredictability and you are comfortable not knowing exactly what the future holds for interest rates, going with a variable interest rate mortgage might work for you and could help you save money in the long term.

Check out the video above to hear from Marc Kulak, Vice President, Real Estate Secured Lending, or speak to a TD Mortgage Specialist to figure out what type of mortgage is best for you.