It's important to understand the differences between mortgage plans, especially in Edmonton's real estate market where housing prices are on the rise, and interest rates may be on their way up as well.
First, there's a fixed rate mortgage. This type of mortgage has a fixed interest rate for a set period of time. The interest rate and your monthly payment will not change throughout the entire term of this mortgage. Locking in to a fixed mortgage may be a good choice if you believe interest rates are on their way up and you want to be protected from rising rates.
Another type of mortgage is a variable rate mortgage. In this type of mortgage, the interest rate will fluctuate with the changing prime rate. Typically, variable rate mortgages carry a lower interest rate than fixed rate mortgages, allowing you to put more of your payments towards the principal of your mortgage. If you feel interest rates are on their way down, it may be wise to choose a variable rate morgage and then lock into a fixed rate before rates rise again.
An "open" variable rate mortgage gives you the added flexibility of making additional payments towards your mortgage at any time, allowing you to pay down your mortgage even faster. An open mortgage also allows you to choose to lock into a fixed term at any time.
Visit your bank or lending company for more information about your mortgage options, so that you are well prepared to determine what option will work best to help save you money.