Mortgage Rates, Fixed & Variable

A fixed-rate mortgage keeps the interest rate fixed for the mortgage term. This provides payment certainty, although prepayment penalties and flexibility can differ significantly between lenders.

A variable-rate mortgage has an interest rate that can change based on the lender's prime rate and the mortgage's pricing formula. Depending on the product, the payment may change with the rate or the payment may remain fixed while the interest/principal split changes.

The right choice depends on your risk tolerance, cash-flow flexibility, plans for the property and expectations about how long you will keep the mortgage. I can compare both options, but there is no one answer that is best for every borrower.

Rates reflect factors such as mortgage insurance, loan-to-value, term, amortization, property type, occupancy, credit, product restrictions and lender funding costs. Two borrowers can receive different pricing even on the same day.

Many lenders offer rate holds for eligible applications for a defined period. The exact period, rate and conditions vary by lender and product.

Some lenders may allow a lower rate before closing if their pricing decreases, while others have specific float-down rules. I will review the lender's policy rather than assume a lower rate is automatic.

Annual Percentage Rate is intended to show the annual cost of borrowing and may include certain non-interest borrowing costs. It can be useful when comparing products, but the mortgage's restrictions and features should also be reviewed.