Fixed Rate Mortgage

A fixed rate mortgage is a mortgage where the rate of interest is fixed for a specific period of time. Generally known as the mortgage term, it usually ranges from between 6 months and 25 years. As time goes on, more of the mortgage payment goes towards the principal and less of the payment goes to the interest.

Variable Rate Mortgage

A variable rate mortgage is a mortgage that has fixed payments, but the interest rate fluctuates with any changes in interest rates. If interest rates go down, more of the payment goes to principal and if interest rates go up, more of the payment goes towards the interest.

Adjustable Rate Mortgage (ARM)

Like a variable, the interest rate for an Adjustable Rate Mortgage fluctuates with Bank Prime. However, unlike a variable rate mortgage, your payments also adjust upwards and downwards with fluctuations in interest rates, ensuring that your amortization period remains constant. ARMs are becoming more and more popular and have gradually replaced VRMs as the preferred "floating" mortgage type.