Many Canadian mortgage consumers have to decide whether a fixed term mortgage is good for them. At Robert FLORIS’ Mortgage Architects office in Hamilton, it is no different. Whether it is a purchase, transfer or refinance, the selection of the mortgage product is vitally important for planning and for saving money.

For the past 30 years it was not a bad idea for taking a variable rate mortgage. This is a rate that fluctuate when rates are decided by the bank of Canada. For example, in 1989, five year fixed rates were 11.75%. Yes this is correct. Any Canadian searching a mortgage would have been wise taking a short term or variable mortgage as rates dropped in the coming years. With a variable rate, there is bigger risk (as rates might go higher), But a bigger reward.

As the world teaches us, nothing goes on forever. In the last few years, mortgage clients have been switching to fixed rates in terms of Canadian mortgages. A fixed rate is basically a rate that will not change for the consumer during the term. The mortgagors can count on this rate.

What are the benefits of fixed rate mortgages?

• They are easy to understand
• No stress with volatility of rates or worries over the economy
• Set payments, for ease of budgeting
• Still have pre-payment privileges [pre-payment privileges are where the consumer can increase payments or put extra money down to pay the mortgage faster]

Although both products are excellent, given that rates are very low, a fixed rate term mortgage product may be the perfect way to meet your financial needs.