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With a fixed-rate mortgage an advantage is that the borrower is protected from any sudden increase in interest rate and monthly payment during the fixed period. Fixed-rate mortgages are very simple to understand and differ little from lender to lender.
There is a slight disadvantage with a fixed-rate mortgage that is if the interest rate go down the borrower fixed period may be higher and cannot come out during that fixed period. This will make it more expensive if interest rates or fall in the future.
A good advantage of a variable rate mortgage is that the borrower could possibility end up with a low interest rate and a low monthly repayment. As a bonus, because the borrower is taking on the risk that the interest rate might rise in the future, the mortgage lender will reward the mortgage borrower with a lower rate, at least initially.
The disadvantage of a variable rate mortgage is the payments fluctuate after the introductory period and the monthly mortgage payments increase if interest rates move up.
Variable-rate mortgages are more confusing than fixed-rate mortgages.
Talk to a broker who will go through a strategy call to find out about your needs and select the best product for you.
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