Variable rate mortgages

In Variable rate mortgage, the interest rate is set for the first few years, and then it's determined by various external economic factors, which are outside the control of the lender and the borrower. Rate will remain same until each of the adjustment periods. Normally for a variable rate mortgage there is a maximum that the interest rate can fluctuate each period and over the life of the loan.

If you planning to stay only for a period of 5-7 years in your new home you are buying, it's always good to choose variable rate mortgage. The interest rate for a variable rate mortgage will be lower than a fixed rate mortgage, but there is a risk of rate fluctuations. With a Variable rate mortgage, you can make extra payments or skip payments if you need to, where the payments with interest will be adjusted to the next monthly installment

Variable rate mortgage is perfect for those who make extra money at a certain time of the year, because it gives the option to pay down your principal much more quickly than a regular mortgage. It's extremely helpful for people who may have to relocate unexpectedly, self-employed people, seasonal employees.

Advantages of a Variable rate mortgage.

Daily calculation of Interest

Many mortgages have interest calculated annually; this means that you pay interest based on the previous year's balance. For variable rate mortgage interest calculations on a day-to-day balance of the loan allows you to pay less interest, especially if you make a lump-sum payment.

Complete lump-sum payment freedom

For a variable rate mortgage, you can make a lump sum payment of any amount at any time without having to pay a penalty. This helps you pay off your mortgage faster and pay less interest.

Take a break

Since variable rate mortgage helps to make a lump sum payment, it will let you to take few months break from mortgage payment.

No redemption charges

For variable Rate mortgage they wont charge any redemption charges that helps you to pay lump sum payment.

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