VARIABLE RATE MORTGAGE SOLUTIONS

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When searching for a mortgage, some homebuyers prefer fixed-rate mortgages for stability in planning and budgeting. However, not all mortgage rates are the same—some offer variable interest rates and different terms.

At RAPTOR MORTGAGES, our expert assist in comparing Toronto's mortgage rates to find the most suitable option for you. Variable rate mortgages in Toronto fluctuate based on lender prime rates, influenced by changes in the Bank of Canada's overnight rate.

Although fixed rates are increasing, many borrowers find comfort in predictable monthly payments. Conversely, variable rates are often lower in cost but carry more risk. With the Bank of Canada cautious due to economic factors like low oil prices and a weaker Canadian Dollar against the US Dollar, it's less likely for them to raise the overnight rate soon.

Beyond the appealing low-interest rates, variable-rate mortgages in Toronto offer several advantages over fixed-rate mortgages:

Enhanced flexibility: VRMs typically incur less severe penalties if broken mid-term than FRMs. Breaking a VRM might result in a penalty limited to three months' interest. In contrast, FRM penalties could be more substantial, calculated as the greater of 3 months of interest or the interest-rate differential (IRD).

Greater potential for savings: Studies, like one conducted by a finance professor at York University, highlight that even considering historical trends without recent Bank of Canada movements, those who chose VRMs have consistently saved money.

Currently, variable rate mortgages in Toronto present a strong choice, especially considering that short-term fixed rates influencing mortgage penalties are notably elevated in contrast to bond yields. This suggests it might be an opportune moment for Toronto residents with fixed rate mortgages to consider transitioning to a variable rate.

Our team at Northwood Mortgage can assist in determining your lender's mortgage penalty for breaking your existing mortgage. Additionally, we offer a comprehensive report that outlines potential savings achievable by transitioning to a lower variable rate mortgage in Toronto.