If you currently have a variable rate, it is likely you are well positioned for variable mortgages with the spread widening from the fixed.

So what happens when the prime rate changes?

When Prime Rate changes, whether it’s an increase or decrease, the customer is advised via letter that their payment will change.

With most banks/lenders the first payment following the Prime Rate change will remain the same and the interest and principal portion will be adjusted to compensate the increase/decrease. The payment following that whether it’s bi-weekly, monthly etc. will reflect any payment change.

For any questions please contact me.

By Mike Hattim