A variable rate mortgage is a great option if you can tolerate some level of risk and don’t mind keeping an eye on the market to see how the interest rate changes may affect your monthly mortgage payments. The variable rate fluctuates with the prime rate otherwise known as the market interest rate. As the prime rate goes up, so does the variable rate.
If you chose a variable rate, you may want to know exactly what the pre-payment term are and how you can pay off your mortgage faster. Most lenders offer monthly pre-payments and lump sum prepayments. Paying off your mortgage faster can help save you thousands of dollars in interest.
Remember, interest rates are driven by the bond market. The 5 year variable rates are derived from 5 year government bond yields and are subject to fluctuation so it is important to consider these factors before making your interest rate decision.
As an example, if the prime rate is 2.45% the variable rate may be prime -1.05% therefore your variable interest rate would be 1.40%
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When it comes to making the decision between a fixed and variable mortgage it really comes down to your level of risk tolerance. Are you a “set it and forget it” type of person who doesn’t’ want to worry about market fluctuations or are you a little more comfortable with some risk and okay with your monthly mortgage payments fluctuating with interest rates increased?
Don’t stress out, let our team of professional mortgage agents help you make the best decision. We work with our clients and crunch the numbers to ensure that you are comfortable with the interest rate and the terms of your mortgage contract.
Here are a few reasons you might want to choose a variable rate for your next mortgage:
1. Flexile Financing:
A variable rate allows you to convert to a fixed rate at any time as long as you stay with your original mortgage lender.
2. Lower Penalties:
If you break your variable mortgage, your penalty is only 3 months interest.
3. Save Money over time:
Historically, people that choose a variable mortgage pay less interest over time in contrast to those who have stuck to a fixed rate.
While there are many benefits for choosing a variable rate mortgage, it is important to remember that there is a certain level of risk involved in this division as interest rates can fluctuate over time. If interest rate increase, so do your payments so it is important to speak with our SafeBridge mortgage agents who can help you decide if a variable rate mortgage is best for you.
At SafeBridge we pride ourselves in helping our customers make the best financial divisions when it comes to their mortgage. A mortgage is probably the single biggest financial division you will make and it is important to have all the options in front of you to make the best long term decision.
Making the decision between a variable and fixed mortgage can be daunting, so let the mortgage agents at SafeBridge do the work for you. Our team of professionals has helped thousands of people choose the right mortgage products through educating our clients and drawing on years of experience. We walk each client through a thorough needs assessment to understand what your financial goals are and how we can deliver the best solutions.
Want to learn more, speak with a SafeBridge Mortgage Agent today to find out what your options are.
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Yes, if you break your mortgage (ie. if you decide to refinance, move etc) you will need to pay a penalty for breaking your mortgage before the end of your mortgage term. The penalty for breaking your variable mortgage is simply 3 months interest and is payable to the lending institution that holds your mortgage. The good news is that the variable rate penalty is substantially lower that the fixed rate penalty which is the IRD penalty.
Mortgage Amount: $650,000.00
Variable Interest Rate 1.55% (on a 30 year amortization)
Monthly mortgage payments $2257.35
Principle $ 1,420.47
Interest $836.88
3 X $836.88 = $2510.64 would be your penalty if you break your variable rate mortgage at any time before the end of the mortgage term.
Yes, unlike fixed rate mortgages, with variable rate mortgages you can switch to a fixed rate at any time throughout the life of your mortgage. Most lenders will ask you to pay a small discharge fee for the transaction. In addition, it is important to understand that by moving from a variable rate to a fixed rat3e you are locking into the lenders posted rate for the amount of time you have left on your mortgage.
As an example, if you are in year 2 of a 5-year term, then lender usually allows you to lock into their current 3 year fixed mortgage rate
Want to learn more, speak with a SafeBridge Mortgage Agent today to find out what your options are.
Chris is a Co-Founder and Financial Advisor at SafeBridge Financial Group, the originators of Mortgage Centered Financial Planning, and is passionate about serving his clients and empowering the incredible team to “Be Better. Be Inspiring.” Prior to co-founding SafeBridge, Chris started his career as a Financial Advisor with Sun Life Financial, formerly Clarica Financial Services, and had the privilege of serving many clients financial needs for over a decade.
Chris Karram,
Over the last 20 years we’ve been successful in attracting over 60 various lenders that our clients can benefit from. SafeBridge has evolved over the years and has become a very successful company…. The education, that comes along with not just the mortgage agent side of things, but also on the insurance and the investments and the financial planning all comes together in one holistic approach.
Elisseos,
Dena is a seasoned Mortgage Broker with 24 years experience in the financial industry. She started her career at Canada Trust as a part-time Teller while attending York University. During her 15 years with TD Canada Trust, Dena held various positions of increasing seniority. As a Senior Financial Advisor she gained knowledge in many disciplines in the banking and investment arena.
Dena Kakaletris,
For several years Andre has worked in the Financial Planning and Mortgage Solutions field with Scotiabank. After experiencing success, and gaining a wide knowledge base in the banking world, he decided to leave the bank to join a Boutique Mortgage Brokerage, Safebridge Financial Group. Andre made the change so that he could offer clients a wider variety of mortgage options and lenders.
Andre Persaud,
At SafeBridge we believe in experiencing growth together. We want to ensure that each of our agents is successful and feels a part of the SafeBridge team. We offer customized training, lender previews, team events and even team trips to build the strong culture of inclusion and support that so many of our agents enjoy.
We believe it is essential to hire and Partner with the right people. We are looking for the best and brightest in the Industry to join our Exclusive Group of Professionals. Our team consists of loyal top producing Agents that have demonstrated exceptional care for their clients and passion for the industry in which they serve. Our Mortgage Centered Financial Planning approach helps our team foster long lasting relationships, which brings a unique process to the mortgage business.
With over 20+ years in the Mortgage Industry, SafeBridge has built a solid reputation in the industry and is well respected by all major lending partners. SafeBridge has partnerships with over 10 insurance providers in Canada and has access to hundreds of mortgage products.
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