Question:

Hi John, I need to know what the differences are between variable and adjusted rate mortgages. What are the advantages and disadvantages of each type of mortgage. Thanks! Michael

Answer:

Hello Michael, A variable rate mortgage is an adjustable rate mortgage and vice versa. The advantages of a variable rate are that the rates are usually set at or below bank prime which is usually below the fixed rates for five year mortgages. Another advantage is that while rates are falling, your rates fall and converserly the disadvantage is that when rates are rising, your rates go up. Most variable rate mortgages have a conversion to fixed rate option which is very beneficial while rates are falling but once they start to go up, you have to choose the rate window that suits you best. We have fixed five year rates at very close to bank prime and it is hard to recommend variable rates when the fixed rates are so low. John Lozinski 613-721-0010

Answered By: John Lozinski

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