Fixed Rate Mortgage

At your mortgage maturity date you can either renew your mortgage with your current mortgage lender and accept the mortgage renewal rate they offer you, or you can switch your mortgage to a lender who is offering you an option to pay down your mortgage faster.

About 120 days before your mortgage maturity you should start comparing mortgage rates to see if your mortgage renewal offer is the best rate. Your offer will be will not be withdrawn if you apply for a mortgage at another lender and isn’t approved. Variable Rate Mortgage

A Variable Rate Mortgage (VRM) can be open or closed and will fluctuate with the Prime Rate of your mortgage lender throughout the term of the mortgage. Your mortgage pegular mortgage payment will remain the same but the payment to your mortgage principal will change.

When lender’s prime lending rate increases, your mortgage rate will increase accordingly and more of your regular payment will go towards paying interest for the mortgage and less toward paying down the mortgage.

When the Prime rate decreases, your interest rate also decreases and more of your regular payments goes towards paying off your mortgage faster.

If having a predictable budget is your goal while paying off your mortgage, then it’s better to have a fixed rate mortgage instead of a variable rate mortgage. If you have a variable rate mortgage and interest rates are increasing, you could always switch to a fixed rate mortgage.