• Variable rate mortgages typically offer a lower interest rate than fixed rate mortgages. 
• As interest rates decline, mortgage can be paid of faster.
• Borrowers save money on reduced interest costs.

• Interest rate is adjusted with changes in Bank of Canada or Lender’s prime rate changes.
• Rise in interest rate causes increase in mortgage interest payment.
• Borrower is exposed to risk and uncertainly in financial market.

• Predictability in your monthly mortgage expenses.
• Easier to compare and shop for best rate mortgage.
• No surprises - Interest rate stays same over the term of the mortgage.

• The longer the mortgage, the more interest you pay.
• If interest rates fall, you could be stuck paying a higher interest rate.
• To take advantage of falling interest rate you are required to refinance your mortgage which may trigger penalties.

INTEREST ONLY VS BALLOON MORTGAGE

• Borrowers pay only interest payments on the mortgage during the term of the mortgage.
• Lower monthly payment during the term of the mortgage.
• Gives borrowers more time to save before paying down principal.

• Lenders typically require larger down payments from and charge more interest rate to cover their risk.
• Loss of income or decreased property value may put the borrower in hardship.
• Borrower must pay the principal amount at the expiry of the term of the mortgage. 

• Fixed rate mortgage with no regular interest payment.
• Attractive to short-term borrowers because this mortgage typically carries lower interest rates.
• Option available to refinance to more traditional terms at the end of the mortgage term.

• At of the end of mortgage term, you must pay the entire amount of outstanding interest and principal.
• In the scenario of decline in property value, it may make it very difficult to refinance.
• This type of loan may be risky for some borrowers because of large payment due at the end of the mortgage term .