Fixed Rate or Variable Rate Mortgage: Which is right for you?

 

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Whether you’re a first time home buyer, looking to switch, or renewing your mortgage, you will be faced with the decision of choosing between a fixed rate mortgage or a variable rate mortgage.


Ultimately it’s not a matter of which one is better, because the best mortgage is the one that works for you.


Here are some key differences between fixed rate and variable rate mortgages to help you make the best choice.





Differences Between Cambrian Fixed Rate and Variable Rate Mortgages

The key differences between the types of mortgages are:

  • Is the interest rate fixed or variable?
  • Is the mortgage open or closed?
  • Can you change the terms of the mortgage, transfer or pay it off without paying a penalty?
Cambrian Mortgages Variable Closed Mortgage Variable Open Mortgage Fixed Rate Mortgage
Interest Rate Variable Closed Mortgage

Can go up or down at any time

Typically a lower rate than Variable Open & 5-Year Fixed Rate
Variable Open Mortgage

Can go up or down at any time

Higher rate than Variable Closed
Fixed Rate Mortgages

Fixed for mortgage term
Term Variable Closed Mortgage

5 year term

Can convert to fixed rate mortgage at any time
Variable Open Mortgage

No mortgage term
Fixed Rate Mortgages

You will need to select a term which range from 6 months to 5 years
Penalty Variable Closed Mortgage

Penalty if you pay off mortgage before the end of the 5-year term
Variable Open Mortgage

No penalty; can pay off mortgage at any time
Fixed Rate Mortgages

Penalty if you pay off mortgage before the end of the term

Which is the best mortgage option for you?

When choosing the type of mortgage for you, it is important to look at your financial circumstances and goals.
Whether a fixed or variable mortgage is better for you really depends on what you value most: lower rate, flexibility or peace of mind.


Rate & Flexibility

If you’re looking for the lowest rate, consider Cambrian’s Variable Closed Mortgage.

Plus, you have the flexibility to convert to a Cambrian Fixed Rate Mortgage at any time without penalty.


Peace of Mind

Some people prefer the security of knowing that their mortgage interest rate stays fixed throughout the mortgage term.
In this case, a Fixed Rate Mortgage may be a better option for you.


Full Flexibility

A Variable Open Mortgage is perfect for people who are looking for the most flexibility with their mortgage.  

If you are uncertain how long you will be staying in the home or want to be able to make changes to your mortgage in the near term, without paying a penalty, then Cambrian’s Variable Open Mortgage might be a great fit for you.

 

  Variable Closed Variable Open Fixed Rate
I want the lowest rate (and some flexibility) Variable Closed

Lowest rate & can convert to fixed rate mortgage at any time*
Variable Open

Higher rate than Variable Closed Mortgage
Fixed Rate

Fixed rate locked in for mortgage term
I want my mortgage payment to stay the same Variable Closed

Payment amount is fixed for 5-year term
Variable Open

Payment may change if amortization is falling behind
Fixed Rate

Payment amount is fixed for length of mortgage term
I want to make additional payments to pay off the mortgage sooner Variable Closed

Can make additional payments up to 20% of original mortgage balance annually
Variable Open

Can make additional payments at any time, of any amount, without penalty
Fixed Rate

Can make additional payments up to 20% of original mortgage balance annually
I want to pay off or make changes to the mortgage in the near term (ex: relocate/sell or add to mortgage) Variable Closed

Can add to mortgage at any time, penalty-free

3-month interest penalty if pay off mortgage before end of 5-year term
Variable Open

Can change or pay off mortgage at any time with no penalty
Fixed Rate

Can add to / refinance penalty-free by blending rates**

Penalty is greater of interest differential or 3-month interest if pay off mortgage before end of term

*At fixed rate in effect at date of conversion; term must be equal to or greater than remaining term

**New term must be equal to or greater than remaining term



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