Question
What are the differences in fixed vs variable mortgage?
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24th Feb 2011 by admint
The difference between the two is how the interest rates are set. In a fixed rate, you will have a constant rate and it won’t be affected by market fluctuations. On the other hand, in a variable rate mortgage, your interest rate fluctuates based on Bank Prime rate (the base interest rate from which the Bank sets all the rest of its interest rates). In effect, during the time that a mortgage deal lasts, the borrower will always make the same payment while in variable rate, payment will go up and down.
The difference between the two is how the interest rates are set. In a fixed rate, you will have a constant rate and it won’t be affected by market fluctuations. On the other hand, in a variable rate mortgage, your interest rate fluctuates based on Bank Prime rate (the base interest rate from which the Bank sets all the rest of its interest rates). In effect, during the time that a mortgage deal lasts, the borrower will always make the same payment while in variable rate, payment will go up and down.
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