You can either start your loan with a variable rate and lock the rate in later or keep a variable rate for the entire term.įixed-rate mortgages offer predictability while variable rate mortgages offer flexibility. Your variable mortgage rate would be the sum of Royal Bank’s prime rate and a predetermined adjustable rate margin. For example, the current prime rate at the Royal Bank of Canada is 2.45%. To determine your variable interest rate, your lender will choose a benchmark index to follow, such as the lender’s prime rate, and then add a fixed percentage on top called the adjustable rate margin. The interest rate changes monthly or yearly because of market fluctuations. Variable rate mortgages are not as straightforward. Once you secure a fixed rate, the rate is unaffected by market changes and you can continue making the same payment each month for the rest of the amortization period. Variable Mortgage RatesĪ fixed-rate mortgage is a loan with an interest rate that does not change over the mortgage term. We will be comparing 2 categories of mortgages: fixed versus variable mortgages and open versus closed mortgages. Mortgages 101 Types of Mortgagesīefore diving into the current mortgage rates at banks, monlines, credit unions, trust companies and private lenders, it is important to define each type of mortgage and how they differ from one another. While many borrowers just go immediately to their bank to secure a loan, you will see the many benefits of going to monoline lenders, credit unions, trust companies, and even some private lenders who are offering more competitive rates to a wider range of borrowers. By comparing mortgages and shopping around, you can find a loan with the best features and an excellent mortgage rate, which in turn, could help you save thousands of dollars in interest over your amortization period.įollowing a brief introductory look at the types of mortgages available and what factors might influence your mortgage rate, we will be comparing current mortgage rates at banks, monoline mortgage lenders, credit unions, trust companies, and private lenders to help you find the lowest mortgage rate.
To find an affordable mortgage with ideal terms and conditions, you want to be informed about the many options that are available to you. Purchasing a home is a lifelong investment.
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