Alberta Fixed Mortgage Rates or Adjustable Mortgage Rates?

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Thursday, July 30th, 2009 Subscribe To Our Feed

There are two different types of mortgages to choose from in Alberta: fixed mortgage rates or adjustable mortgage rates. Figuring out the various types of loans can, to a certain extent, be nerve-racking experience for the average home-buyer.

The type of mortgage you will want to choose largely depends on the interest rate. It’s important to keep in mind that just because the rate is low, it doesn’t mean it with garner the most savings over the long haul.

Fixed Mortgage Rates

Fixed mortgage rates mean that the interest and monthly payments remain the same throughout the entire life of the loan. All the borrower has to do is remain compliant with the terms, and they’ll never be subject to a rate increase. The major advantage to this is that the borrower can budget the precise amount of their payments. This makes creating a personal budget simple.

If the economy is subject to rising interest rates, your best bet is to stick with a fixed interest rate. If the rates go down later on, you can always refinance. Fixed rates ensure that you won’t have to deal with unexpected hikes in the future. Essentially, when the economy isn’t in your favor, you’re protected.

Adjustable Mortgage Rates

An adjustable mortgage rate means that the terms are adjusted on an agreed-upon schedule according to the national index. The borrower is at an advantage in this investment when the rates are high but expected to decrease. They won’t be locked into a high rate years down the road.

Borrowers can choose to have the rate remain fixed over a period of one, three, or five years. This makes it easy for borrowers to adjust their mortgage to new rates that are lower than the previous rates.

If you’re trying to make a decision about your finances in Alberta, either fixed mortgage rates or adjustable mortgage rates could be the deciding factor in saving money, depending on the current economic situation.

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