Although fixed rate mortgages offer predictability, there are some downsides to consider. Your initial interest rate may be higher compared to a variable rate mortgage and you will be locked into that specific rate for the whole mortgage term. There is also uncertainty regarding penalty fees if you decide to break your mortgage. The penalty for fixed rates will be calculated based on the greater of a 3 month interest penalty or an interest rate differential (IRD). Unfortunately, there is no set formula for how that penalty is calculated and depending on your lender can vary materially.

• Your credit score, which provides insight into the likelihood of you paying the mortgage loan
• Whether you choose a fixed or variable rate
• The length of your mortgage term
• The amount of equity (or down payment on a purchase) you have in your home
• If the property is a rental or not
• The lenders you work with. Typically, big banks charge more than other lenders

If you are unsure of which type of mortgage you should go with, create a Perch profile or speak to a Perch mortgage advisor today. Regardless of where you are in your real estate journey, Perch can help you find the best mortgage rates and guide you to make more informed decisions. You can also use the free mortgage calculator to get insights into your mortgage cost and payments to help you determine your purchasing power.

Additional Resources

https://www.canada.ca/en/financial-consumer-agency/services/mortgages/interest-on-mortgages.html

https://myperch.io/rates