RSS

Mortgage Language Made Simple #1

Purchasing a home in itself can be stressful enough. Being bombarded with unfamiliar jargon can add to that stress. Fortunately for you, we've created a helpful cheat sheet that will make you a mortgage expert in no time!

Variable-Rate Mortgage
Your mortgage rate will fluctuate with any changes with the current prime interest rate. In essence, if the prime rate declines, more of your payment will go towards paying off your principal. However, if the prime rate increases, more of your payment will go towards covering interest costs.

As a whole, you may end up paying a lower average rate in comparison to a fixed-rate mortgage. If interest rates are cliombing, you can switch over to a fixed-rate mortgage.

Advantages of a Variable-Rate Mortgage
- Due to the fluctuations, any decreases in the prime rate will work in your favor.
- Generally variable-rates are lower than fixed-rates as a way to compensate for the risk factor.

Disadvantages of a Variable-Rate Mortgage
- More risk involved due to the lack of security & stability.
- Financial uncertainty - Significant increases in prime rate will increase your interest payable which will consequently increase your financial burden.

By the end of this 4-part series, you'll be well informed on the various elements involved in mortgage plans and you'll be able to decide on what plan is best suited for your needs.

The data relating to real estate on this website comes in part from the MLS® Reciprocity program of either the Real Estate Board of Greater Vancouver (REBGV), the Fraser Valley Real Estate Board (FVREB) or the Chilliwack and District Real Estate Board (CADREB). Real estate listings held by participating real estate firms are marked with the MLS® logo and detailed information about the listing includes the name of the listing agent. This representation is based in whole or part on data generated by either the REBGV, the FVREB or the CADREB which assumes no responsibility for its accuracy. The materials contained on this page may not be reproduced without the express written consent of either the REBGV, the FVREB or the CADREB.