FAQ (Frequently Asked Question)
In a Fixed Rate Mortgage, the interest rate is fixed for a specific amount of time. This period of time (the mortgage term) can range anywhere from 6 months to 10 years.
Variable Rate mortgage products are based on the prime lending rate. A variable rate will be quoted as Prime plus/minus a specified amount by your lender. Though the prime lending rate may fluctuate, the relationship to prime will stay constant over your term. For example if the prime rate as set by the BoC (Bank of Canada) is 3.95% today and a lender is offering Prime -.50% – your rate at signing will be 3.95% – .50% = 3.45%. As the Prime rate might fluctuate so will your interest payment of your mortgage.
Over the course of your mortgage, more of the payment will go towards the principal and less towards the interest.