Pros and Cons of Variable Rate Mortgages

When it comes to mortgages, one of the most popular options in Canada is the variable rate mortgage. Variable rate mortgages offer lower interest rates than most traditional fixed-rate mortgages, but they also come with a few risks. It’s important to understand the pros and cons of variable rate mortgages before making a decision.

Pros:

Lower Rates: Variable rate mortgages offer lower interest rates than most fixed-rate mortgages in Canada. This makes them an attractive option for those looking to save money on their monthly mortgage payments.

Flexibility: Variable rate mortgages offer more flexibility than fixed-rate mortgages. If interest rates drop, it is easier to take advantage of the lower rate with a variable rate mortgage.

Cons:

Risk of Rising Rates: Variable rate mortgages come with an inherent risk of rising interest rates. If interest rates go up, your monthly payments could become much higher than you anticipated.

Lack of Stability: Variable rate mortgages can also lack stability. The interest rate can fluctuate from month to month, which can make budgeting difficult.

In conclusion, variable rate mortgages can be a great option for those looking to save money on monthly mortgage payments. However, it’s important to understand the risks associated with variable rate mortgages before making a decision. If you’re comfortable with the risks, a variable rate mortgage could be a great option.