Is this the right time to lock in your mortgage?

Many Canadian homeowners are having problems deciding on whether to choose a fixed rate or a variable rate mortgage. This decision can affect how much your monthly payments are and how much interest you pay over the life of the mortgage.  Here is a breakdown of the advantages and disadvantages of variable and fixed rate mortgages.

 Fixed Rate mortgages

The advantage is you have a fixed mortgage payment over a chosen period.  Since the payments are fixed, you are able to better budget your money. You also know exactly how much interest and principal is paid over the life of the agreement. If rates increase, you are locked at the lower rate.


The disadvantages are you’re locked in a certain rate for a given period. If interest rates decrease and rates lower, your rate stays the same.


Open Mortgages

The advantages are that you have flexibility. Your interest rate is affected by the interest rates set by the Bank of Canada.  You can also lock in, if rates lower.

The disadvantages are your payment is affected by the markets. Even the slightest increase or decrease can affect how much you pay each month. In the 1980’s interest rates drastically increased. Many people were unable to afford their mortgage payments and walked away from their homes.

Most mortgage brokers and banks are able to help you decide on what is best for you. Most offer you free mortgage assessments. Make sure you understand all of the details remember this is the biggest purchase most people will make in life.