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(October 11, 2021)

Intro (pre-amble): up to 11:37 mark of podcast (a VARIABLE rate mortgage with FIXED payments | will Canadian & US debt ceiling issues lead to a spike in interest rates? | climate change & rising sea levels…how and when will this impact Vancouver infrastructure and real estate?)

Did you know that there are variable rate mortgages that allow you to have fixed payments regardless if the rate changes? There is such a product and it’s referred to as a Capped Variable Rate mortgage.
Here is a breakdown of the the two types of variable rate mortgages:

Capped Variable Rate Mortgage:
- the interest rate fluctuates when a lenders prime rate changes
- generally, your payment amount stays fixed for a determined period of time or up to a certain threshold of rate increases (as outlined by your specific lenders loan terms and conditions), however, the interest rate will fluctuate with any changes in Prime rate. If Prime Rate goes down, more of your payment will go towards paying off your principal; if the Prime Rate goes up, more of your payment will go towards interest costs rather than the principal pay down.
Adjustable Variable Rate Mortgage:
- the interest rate fluctuates when a lenders prime rate changes
- your payment amount adjusts automatically to reflect changes in the Annual Interest Rate and in the number of days in the month. This means your payments may change from payment date to payment date.