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Which do you prefer, Variable or Fixed Rate?

Preference

To have a mortgage is said to be one of the greatest financial decisions that you will ever have to make. If that is the case, it is important for you to consider the present factors before you choose to acquire one. The kind of mortgage will depend on your identified goals; the same with the rate of your mortgage. In marketplace of today, you have given to an option to choose from; that is the variable or fixed.

 

Variables rate can either be an addition or a decrease of the term during mortgage. The lender has the option of giving you discount rate or premium rate. The premium rate will be the prime addition of the set amount whereas the discount rate is the prime less of the set amount. Because of the changing nature of prime rate, a borrower must be open with some possibility of risk.

 

Mortgages having fixed rates cannot experience any fluctuation or change in any amount being paid towards principal and interest by the time the term of mortgage rate is locked. There are no choices in changes to the term of mortgage. In short, fixed rates give stability and consistency in the borrower.

 

Preference of stability to obtain peace of mind and comfortability of taking risk to a possibility of saving money are some of the considerations that you need to take in choosing between the variable or fixed rates. Your answer must connect with the objectives you have in mind.

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