The answer to this question depends on many factors. Some people may feel comfortable with the idea of a variable rate mortgage while others may prefer the stability of a fixed rate mortgage. Here are a few things to consider when making your decision:
Your comfort level with risk: Variable rate mortgages typically have lower interest rates than fixed rate mortgages. However the interest rate can fluctuate which means your monthly payments could go up or down. If you are comfortable with this type of risk a variable rate mortgage may be a good option for you.
Your financial situation: If you are in a good financial situation and you are able to afford the potential monthly payment increases that could come with a variable rate mortgage this option may be right for you. On the other hand if you are struggling financially or you are tight on budget a fixed rate mortgage may be a better option.
Your plans for the future: If you plan on staying in your home for a long time you may want to consider a fixed rate mortgage. This way you won’t have to worry about your payments going up in the future. However if you plan on selling your home in the near future a variable rate mortgage may be a better option since you may be able to take advantage of lower interest rates.
There is no right or wrong answer when it comes to deciding between a variable rate mortgage and a fixed rate mortgage. It ultimately comes down to your personal preferences and your financial situation. Be sure to do your research and speak with a financial advisor to make the best decision for you.
What is a variable rate mortgage?
A variable rate mortgage is a type of mortgage where the interest rate can change over time.
How often can the interest rate change on a variable rate mortgage?
The interest rate on a variable rate mortgage can change at any time.
How does the interest rate on a variable rate mortgage compare to the interest rate on a fixed rate mortgage?
The interest rate on a variable rate mortgage is usually lower than the interest rate on a fixed rate mortgage.
What are the benefits of a variable rate mortgage?
The benefits of a variable rate mortgage include the potential for lower monthly payments and the possibility of paying off the mortgage sooner.
What are the risks of a variable rate mortgage?
The risks of a variable rate mortgage include the potential for the interest rate to increase which could make monthly payments more expensive and the possibility of having to sell the home if interest rates rise too high.
Can I lock in my interest rate on a variable rate mortgage?
Yes you can typically lock in your interest rate for a period of time on a variable rate mortgage.
Should I get a variable rate mortgage if interest rates are low?
Yes you may want to consider a variable rate mortgage if interest rates are low.
This could help you save money on your monthly payments and potentially pay off your mortgage sooner.
Should I get a variable rate mortgage if interest rates are high?
No you may want to consider a fixed rate mortgage if interest rates are high.
This could help you keep your monthly payments the same for the life of the loan.
What happens if I can’t afford my monthly payments on a variable rate mortgage?
You may be able to sell your home or refinance your mortgage if you can’t afford your monthly payments on a variable rate mortgage.
Should I get a variable rate mortgage if I plan on selling my home in the near future?
No you may want to consider a fixed rate mortgage if you plan on selling your home in the near future.
This could help you keep your monthly payments the same for the life of the loan.
Should I get a variable rate mortgage if I plan on living in my home for a long time?
Yes you may want to consider a variable rate mortgage if you plan on living in your home for a long time.
This could help you save money on your monthly payments and potentially pay off your mortgage sooner.
What happens if interest rates go up on my variable rate mortgage?
If interest rates go up on your variable rate mortgage your monthly payments will likely go up as well.
What happens if interest rates go down on my variable rate mortgage?
If interest rates go down on your variable rate mortgage your monthly payments will likely go down as well.
Should I get a variable rate mortgage if I plan on making extra payments?
Yes you may want to consider a variable rate mortgage if you plan on making extra payments.
This could help you save money on your monthly payments and potentially pay off your mortgage sooner.
What is the minimum down payment I need for a variable rate mortgage?
The minimum down payment you’ll need for a variable rate mortgage is typically 5%.
