2908 Hwy 7 Vaughan, ON L4K 0K5, Canada
Variable-Rate Mortgages
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Learn about Variable-Rate Mortgages
Is a Variable-Rate Mortgage Right for You?
A variable-rate mortgage (VRM) offers an initial period with a lower interest rate that adjusts over time based on market conditions. This can be a great option for homeowners who want lower payments upfront and are comfortable with potential rate changes in the future. If you plan to move, sell, or refinance before the rate adjusts significantly, a VRM could save you money in the short term.
How a Variable-Rate Mortgage Works.
1.
Choose Your Loan Term
Variable-rate mortgages typically offer lower initial interest rates, and they come in various terms, often 3, 5, 7, or 10 years. After this initial period, the rate will adjust based on market conditions.
2.
Learn the Adjustment Period
Once the initial period ends, the interest rate adjusts periodically, usually annually, based on an index (such as the prime rate). The rate can go up or down, affecting your monthly payments.
3.
Monitor Market Changes
Keep an eye on the market as your rate may adjust, but don’t worry—your lender will provide a cap to protect you from drastic increases in interest rates.
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Our Variable-Rate Mortgage Options
We offer a variety of variable-rate mortgage options designed to meet your needs. Here’s what we offer:
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FAQs
What is a variable-rate mortgage?
A variable-rate mortgage (VRM) is a mortgage with an interest rate that changes periodically based on an index, such as the prime rate. The rate typically starts lower than a fixed-rate mortgage but adjusts over time.
How does a variable-rate mortgage differ from a fixed-rate mortgage?
A fixed-rate mortgage has a constant interest rate for the life of the loan, while a variable-rate mortgage has an interest rate that can change at regular intervals based on market conditions.
What is the benefit of a variable-rate mortgage?
The main benefit is the lower initial interest rate, which can lead to lower monthly payments in the early years of the loan. It’s ideal if you plan to sell or refinance before the rate adjusts significantly.
When will the interest rate change on a variable-rate mortgage?
After the initial fixed period, the interest rate will adjust based on the market index at regular intervals, typically annually. The lender will notify you before each rate change.
How often can the interest rate change?
The interest rate can change annually after the initial fixed period, but it is often subject to a cap to protect homeowners from drastic increases.
Can I lock in a fixed rate after the initial period?
Some lenders allow you to lock in a fixed rate once the initial period ends. Be sure to check with your lender for specific terms regarding this option.
Is a variable-rate mortgage a good option for first-time buyers?
A variable-rate mortgage can be a great option for first-time buyers who plan to stay in the home for a short time and want to take advantage of lower initial rates.
What happens if my interest rate goes up?
If interest rates rise, your monthly payment will increase. However, your lender will provide a cap to prevent drastic increases, and the rate adjustments are usually gradual.
How do I qualify for a variable-rate mortgage?
To qualify for a variable-rate mortgage, you’ll need to meet the lender’s credit requirements and provide documentation such as proof of income, credit score, and debt-to-income ratio. The better your credit, the more favorable the rates.