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3-Year Variable Mortgage Rates

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3-Year Variable Mortgage Rates

A variable mortgage rate also known as a floating rate mortgage, is a mortgage option where the interest rate can fluctuate at anytime. The variable rates are associated with the Bank of Canada prime interest rate. That means, when the Prime Interest rate is increased by the Bank of Canada, your interest rate will go up and vice versa. The banks and mortgage lenders provide better rates than the prime rate.

The Prime rate is used by the Bank of Canada to deal with inflation. When there isn’t much inflation, the prime rate is low. But, prime rate skyrockets, if inflation rises. It can be an expensive affair for a few borrowers, but still a variable rate mortgage saves you more money as compare to a fixed rate mortgage.

All You Need To Know About 3-Year Variable Mortgage Rates

In a 3-year variable mortgage rate, your interest rate is set for 3 years. That means, your mortgage option will absorb the changes in the interest rates for the complete 3 years – whether the rates go up or down. Borrowers need to make the mortgage payments as per the fluctuations in the prime rate and other contractual provisions with the lender.

General Advantage and Disadvantages of 3-Year Variable Mortgage Rates

The initial interest rates for variable mortgage are generally lower than a fixed rate, which means your monthly mortgage payments are low. If you plan to stay in your home for a short period or want to sell your home soon before the initial mortgage rate adjusts, variable rates are ideal for you. If you are expecting an increase in your income in the future, this option can save you a considerable amount of money by having a lower monthly payment, but you also need to be ready to make higher payments in the future when income increases and the variable rate adjusts.

Variable mortgage rate is considered riskier as there are chances that the interest rate may go up after the initial fixed-rate period ends. Generally, variable rates are lower than a fixed rate, but fixed rates also get you protection against interest rate instability.

Overview of Variable Rate Closed and Open Mortgages

Open Mortgage

An open mortgage is the best option for the borrowers who are planning to repay the loan, in full or in part, any time before maturity of the term. There won’t be any prepayment charges and the terms in such option range between six months and one year.

Closed Mortgage

A closed mortgage cannot be paid off or refinanced before the maturity of the term. The borrower needs to pay the lender a compensation penalty for prepayment. The economic conditions decide the interest rates that may or may not be lower.

Why choose GN for your mortgage needs?

Whether you are a First Time Home Buyer or want to get a mortgage renewal, a 3 year variable mortgage rate may be the right fit for you. We, at GN, help you choose the best mortgage option that can save you thousands of dollars over the 3 year period. Our mortgage agents provide an array of products, tools and services that are designed to meet your financial and housing needs.

Speak to our mortgage agent today to know the best mortgage option available.
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