What Is a Variable-Rate Mortgage?
A variable rate mortgage is undoubtedly one of the most popular mortgage types available today. With opportunities for significant savings on interest, this mortgage type is favoured by homebuyers of all distinctions. A variable-rate is a loan with an adjustable interest rate. The rate adjusts periodically, with changes dictated by the fluctuations in the market. Clients of ours favour ARMs for their cost-saving potential.
Variable-rate loans are very similar to adjustable-rate mortgages, with one crucial difference. With an ARM, the monthly repayment amount changes with the interest rate. With a variable-rate loan, however, monthly payments remain the same.
Would you like to learn more about variable-rate mortgages and the many mortgage products available to you? Contact us at your convenience.
What Is Mortgage Refinancing?
To refinance a mortgage is to eliminate your existing mortgage and replace it with a new one. When refinancing your mortgage, the old loan is paid in full by the new mortgage. With the assistance of your mortgage broker, you are also able to establish completely new rates, terms, and conditions for the new mortgage.
When many of our clients seek to refinance their mortgage, they opt to switch from a fixed-rate loan to a variable-rate. While there are many benefits to having a variable-rate mortgage, the choice is ultimately yours.
How Does a Variable-Rate Mortgage Work?
Variable-rate mortgages have a five-year fixed term length. Your payment figure will stay the same from month to month for those five-years.
While the payment amount remains the same, the rate of interest will change. This means that if you increase your monthly payments, you will directly reduce your amount owed, thus reducing your interest rate each month. When rates are low, however, more money will go towards the principal balance.
What Is the Difference Between Variable-Rate and Fixed-Rate Mortgages?
The primary difference between a variable-rate and fixed-rate loan lies in the rate of interest. With a fixed-rate mortgage, the rate of interest does not change. Regardless of market fluctuations, you'll have the same interest on your loan for the agreed-upon period. With the variable-rate loan, your interest rate will fluctuate with the shifts in the market. This means that you'll have an opportunity to reap the cost-saving benefits of market fluctuations.
Contact Our Brokerage Firm Today
Take your future into your own hands by refinancing your mortgage. Let us help you forge a path that promises financial security today, tomorrow, and for years to come.
Schedule your first consultation by calling (888) 418-6979 today.