Don’t like being locked in?
Depending on the level of risk you are willing to take, a variable rate mortgage can save you money while keeping your options open during times of volatile or fluctuating interest rates. A VRM is best when rates are stable or going down.
With variable rate mortgages your mortgage payment could increase or decrease depending on fluctuations in the Prime rate (set by the Bank of Canada). With most variable rate products you can lock in at our discounted rate (not bank posted rates) anytime during your term. Variable rate mortgages are recommended for the more knowledgable mortgagee or for those that have room in their monthly budget to handle an increase in the Prime lending rate.
Most lenders review VRMs monthly or sometimes quarterly, and the mortgage payment changes with the change in the interest rate charged on the mortgage.
You can always convert to an open or closed mortgage if it looks like rates are rising. You need to watch the money markets to determine when that time is right. Lenders will generally charge a conversion fee.