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variable rate mortgage

For a long time, it was a common ideology that a variable rate mortgage was ideal when purchasing a home. The thought process was based on the theory that if the rate drops, you’ll be able to reap the benefits of lower interest payments as opposed to someone who is in a fixed-rate mortgage.

Before we get into the nitty-gritty of it, let’s review how interest rates impact a mortgage and the difference between a fixed-rate and a variable-rate mortgage.

Interest rates are determined by the Bank of Canada and often reflect the state of the economy. When the economy is strong, interest rates are high. This means that borrowing money would cost more, but you should receive a higher payout on your investments. When the economy…

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