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.