Sarah A. Colucci, York Region's Mortgage Expert. Savings Guaranteed.
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Sarah Colucci's Mortgage Blog

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Mortgage News 2022

Why A Variable Mortgage Rate May Be A Better Option.

11/10/2021

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I often get asked whether the variable rate is better than the fixed rate and vice versa. The answer to this question depends on a person's appetite for risk and whether they can afford a 1-2 percent increase in their interest rate. 

Recently, variable mortgage rates have been historically low. Consider RMG Mortgages, offered exclusively through the broker channel, is offering a five-year variable as low as 1 percent. 



Variable mortgage rates also come with less risk of forking out huge, unexpected and dreadful prepayment penalties down the road, often seen when breaking fixed-rate mortgages.

When exiting or breaking a variable-rate mortgage contract, the penalty is just three months' worth of interest. On the other hand, breaking mortgage contracts with fixed rates usually amounts to more because of the Interest-Rate-Differential calculation. 
"An interest rate differential (IRD) weighs the contrast in interest rates between two similar interest-bearing assets. Most often, it is the difference between two interest rates."

Also, consider that you can always lock your variable rate into a fixed rate. It's important to realize, however, that although you may lock into a fixed rate at any time, you will only qualify for what the fixed rates are at the time you lock in and not what they were when you originally signed your mortgage contract. This means their may be a risk of taking on a higher rate in the future. 

If you still have questions about taking on a variable rate mortgage vs. choosing a fixed-rate, please do not hesitate to call or write. 

Send us an email at sarah.colucci@mortgageedge.ca or call 647-773-4849.



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    By: Sarah Colucci

    Senior Mortgage Agent, Lic. M14000929

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Address

411 Queen St. 
Newmarket, ON
​L3Y 2G9

Sarah A. Colucci, Mortgage Agent Lic. M14000929
Sherwood Mortgage Group
Licence # 12176

Telephone

Direct: 647-773-4849
​
Email: scolucci@sherwoodmortgagegroup.com
Picture
  • Home
  • WHY USE SARAH FOR YOUR NEXT MORTGAGE
  • APPLY ONLINE
  • PRODUCTS
    • Free House Value Tracker Report
    • CASH-BACK MORTGAGE
    • BRIDGE FUNDS
    • REVERSE MORTGAGES
    • SELF-EMPLOYED MORTGAGES
    • FIRST-TIME HOME BUYER PRE-APPROVALS >
      • FIRST-TIME HOME BUYER TAX CREDIT
    • MORTGAGE REFINANCE >
      • Prepayment penalties
    • SPOUSAL BUYOUTS
    • INVESTMENT PROPERTIES AND RENTALS
    • BRUISED CREDIT
    • PRE-APPROVALS
    • NEWCOMERS
    • DEBT CONSOLIDATION
    • HOME EQUITY LINE OF CREDIT
    • PURCHASE PLUS IMPROVEMENT PROGRAM
    • WHY INVEST IN REAL ESTATE
    • MORTGAGE RENEWALS >
      • New Mortgage Rules and Mortgage Renewals
    • SECOND MORTGAGE LOANS
    • LESS THAN 20% PROPERTIES
    • DOWN PAYMENT
  • CONTACT ME
  • PRIME RATE CANADA
  • CLOSING COSTS
  • DOCUMENTS REQUIRED FOR MORTGAGE FINANCING
  • MORTGAGE DICTIONARY
  • MORTGAGE NEWS
  • GOVERNMENT MORTGAGE RULES
  • MORTGAGE TIPS
  • HOUSE HUNTING CHECKLIST
  • APPRAISALS
  • FIXED OR VARIABLE RATE?