Open variable-rate mortgages are increasingly popular with Canadians who want low interest costs and the freedom to pay off a mortgage early. You have arrived at the best site for current variable open mortgage rates in Canada. With this resource, you will be able to understand more fully the advantages and disadvantages of open variable-rate mortgage products. Moreover, you can apply quite easily for one of these loans simply by selecting one of the variable open mortgage interest rates on this page. Read on to find out everything you need to know about variable open-rate mortgages, and click on the best rate to apply for your loan.
Variable Open Mortgage Rates: The Basics
The rate of interest that you pay on an open variable-rate mortgage is otherwise known as the variable open mortgage rate. As its name suggests, the variable open mortgage rate has the potential to vary from month to month. Unlike fixed mortgage rates, which never change, variable mortgage rates change as often as the prime rate changes. When you sign for an open variable-rate mortgage, you know how many percentage points your lender will add to or subtract from the prime rate in order to determine your current interest rate, so you can predict how much your rate will vary if you know what the prime rate is expected to be in any given month.
Since an open mortgage in Canada can be paid off before the end of its term without causing borrowers extra fees, lenders know that there is a risk that they will make less money on open mortgages than they will on closed mortgages with pre-payment penalties. To compensate for this potential loss, the variable open mortgage rate offered by most lenders is higher than the variable closed mortgage rate offered by the same lenders. In any case, the best variable open mortgage rates tend to be lower than the best fixed open mortgage rates, which means that you will likely experience greater savings in interest payments over time when you choose a variable-rate mortgage. There are, of course, other advantages and disadvantages of open variable-rate mortgages that you should know about:
ADVANTAGES
• No Pre-Payment Penalties — Since there are no pre-payment penalties on an open variable-rate mortgage, you can pay off your loan early without any worries. Even though your rate will be higher on an open mortgage than on a closed mortgage, over time you will likely save more money on a variable open mortgage than you will on a fixed closed mortgage when you are certain to pay off your loan well before the end of your term.
• Flexibility — Due to the lack of additional fees for pre-paying an open variable-rate mortgage, your options for refinancing are more flexible, and you will feel more free to change over to a different loan term at any point than if you were to have a closed variable-rate mortgage.
DISADVANTAGES
• Cost — Because open variable mortgage rates are higher than closed variable mortgage rates, it can cost you more over time to hold an open variable-rate mortgage if you do not pay it off well before the end of its loan term.
• Uncertainty — It is far more difficult to create a budget when you have a variable-rate open mortgage. Although you know how much the lender will add to or subtract from the prime rate for your interest charges, you do not know what the prime rate will be. Drastic changes in this rate can dramatically increase or reduce your payment, thereby dramatically increasing or reducing your expendable income each month.
Is an Open Variable-Rate Mortgage Right for Me?
Whether or not an open variable-rate mortgage is right for you depends primarily on your own personality and circumstances. As far as your personality, a variable open mortgage should be just fine for you if you are not a risk-adverse investor or spender. On the other hand, if any degree of uncertainty in your financial life stresses you out, you will probably want a fixed-rate mortgage because its cost is far more predictable than a variable-rate loan.
Your individual circumstances can also help you see whether an open variable-rate mortgage is the best option for you. If you have a good income that is stable from month to month, you should have few concerns about taking out an open variable-rate loan because rate changes will not likely have a huge impact on your financial bottom line. On the other hand, if your income varies greatly from month to month, a change in interest rate can drastically impact your financial situation. This means that a variable-rate loan is not a good choice for you. Finally, if you know for certain that you will be unable to pay off your mortgage before the end of its term, you should not choose an open variable-rate mortgage. In such cases, a closed variable-rate mortgage will save you a lot more money because its interest rate will be lower.
Is There Anything Else I Should Know About Variable Open Mortgage Rates in Canada?
Here are some other facts that you should know about open variable-rate mortgages in Canada:
• Open mortgages tend to be less popular overall in Canada than closed mortgages, probably because of higher open mortgage interest rates. Nevertheless, many people with short-term loans of less than three years opt for an open mortgage.
• Variable-rate mortgages tend to be most popular with middle-aged people (ages 35–54), probably because they are at the peak of their earning years and can afford rate fluctuations better than others.
• Products that incorporate the features of both closed mortgages and open mortgages are available in Canada. However, less than five percent of all Canadians choose such loans.
Apply for Your Open Variable-Rate Mortgage
Should you decide that an open variable-rate mortgage is right for you, we can help you get the best mortgage at the lowest rate. Click on any of the variable rates on this page or fill out the online mortgage application to apply for your open mortgage loan.
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