Ratebuzz
Your interest rate
The interest is the fee you pay to the lender for borrowing money. The higher your interest rate, the higher your mortgage payments will be. Every time you renew your mortgage term, you renegotiate your mortgage interest rate. This means your mortgage payments can be higher or lower in the future.
When you apply for a mortgage, your lender offers you an interest rate. You can negotiate this rate to see if they can offer you a lower rate.
The interest rate your lender offers you may depend on:
- the length of your mortgage term
- the type of interest you choose
- the current posted interest rate offered by your lender
- your credit history
- if you’re self-employed
- if you qualify for a discounted interest rate
- the type of lender you choose like a bank, credit union, financing company or mortgage investment company
- the specific lender
Before you commit to a lender, shop around to get the best rate for you. This could save you thousands of dollars.
Fixed interest rate
A fixed interest rate is attractive to borrowers who don’t want their interest rates fluctuating over the term of their loans, potentially increasing their interest expenses and, by extension, their mortgage payments. A fixed interest rate stays the same for the entire term. They are usually higher than variable interest rates.
Variable interest rate
A variable interest rate can increase and decrease during the term. Typically, the interest rate is lower with a variable interest rate than a fixed interest rate.
With a variable interest rate, you can keep your payments the same for the duration of your term. Lenders call this a fix payment with a variable interest rate. You also have the option to opt for an adjustable payment with a variable rate. With adjustable payments, the amount of your payment will change if the rate changes.
