A variable-rate mortgage (VRM) is a type of home loan that has an interest rate that changes over time. This type of mortgage is becoming increasingly popular in Canada, as more Canadians are taking advantage of the benefits it offers.
VRMs offer a number of advantages over traditional fixed-rate mortgages. The most significant benefit is that the payments are typically lower than those of a fixed-rate mortgage. This is due to the fact that the interest rate is adjusted based on the Bank of Canada’s prime rate, meaning that payments can decrease when the prime rate does. This can save homeowners a lot of money in the long run.
VRMs also offer more flexibility than fixed-rate mortgages. Most VRMs have the option to convert to a fixed-rate mortgage at any time if the prime rate begins to rise. This gives homeowners the ability to switch to a fixed-rate mortgage if they find themselves in a financial situation where they can no longer afford the fluctuating payments of a VRM.
Finally, VRMs can be a great option for those who are looking to purchase a home but have limited resources. Since the payments are typically lower than those of a fixed-rate mortgage, it can be easier to qualify for a VRM. This can be especially helpful for first-time homebuyers who may not have the financial means to qualify for a more expensive fixed-rate mortgage.
Overall, a VRM can be a great option for those looking to purchase a home in Canada. Not only do they offer lower payments, but they also offer more flexibility and can be easier to qualify for. If you’re considering purchasing a home, it’s worth looking into the benefits of a VRM.