When buying a home in Vancouver, you'll need to decide between a fixed or variable mortgage rate. Each type has its pros and cons. The decision can affect your monthly payments, the total cost of your mortgage, and your long-term financial plans.
This article will help you understand the differences between fixed and variable rates. By the end, you'll know which one is best for you.
What Are Fixed vs. Variable Mortgage Rates?
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Fixed-Rate Mortgages:
A fixed-rate mortgage means your interest rate stays the same for the entire loan term. This makes your payments predictable. You won’t have to worry about rate changes.
Benefits of Fixed-Rate Mortgages:
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Predictability: Your payments stay the same, making it easier to budget.
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Protection from Rising Rates: If rates increase, your rate stays the same.
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Stability: Ideal for those who want security and don't want to take risks.
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Variable-Rate Mortgages:
A variable-rate mortgage has an interest rate that can change. It’s usually based on the prime rate. The rate can go up or down over time.
Benefits of Variable-Rate Mortgages:
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Lower Initial Rates: You may start with a lower interest rate than a fixed-rate mortgage.
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Savings in Falling Rates: If rates go down, your payments may drop too.
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Flexibility: Good if you plan to pay off your mortgage quickly or expect rates to stay low.
Current Rates
Here’s a quick look at the current mortgage rates in Vancouver:
| Term | Bank Rates | Our Rates | Savings per $100K |
|---|---|---|---|
| 6 Months | 7.89% | 7.49% | $25.28 |
| 1 Year | 7.74% | 5.29% | $148.47 |
| 2 Years | 7.34% | 5.19% | $129.06 |
| 3 Years | 6.94% | 4.34% | $152.11 |
| 4 Years | 6.74% | 4.34% | $139.83 |
| 5 Years | 6.79% | 4.29% | $145.64 |
| 7 Years | 7.10% | 5.35% | $104.91 |
| 10 Years | 7.25% | 5.75% | $90.90 |
Final Thoughts: Making the Right Decision for You
Choosing between a fixed or variable mortgage is a significant decision that depends on your unique financial situation, long-term plans, and tolerance for risk. If you value stability and predictability, a fixed-rate mortgage is likely the better choice. However, if you’re comfortable with some uncertainty and want the potential to save money if interest rates fall, a variable mortgage might be a good fit.
Before making your decision, it’s always a good idea to consult with a mortgage broker in Vancouver who can help you navigate the complexities of today’s mortgage market and secure the best deal for your situation.