Adjustable-Rate Mortgage in Mississauga

eMortgage Solutions is the mortgage broker of choice in Mississauga thanks to our comprehensive range of adjustable-rate mortgage options, our personalized, expert customer support, and our below-average interest rates.

Speak with a representative today—give us a call at (416) 258-0156.

What Is an Adjustable-Rate Mortgage?

In the simplest terms, an adjustable-rate mortgage, also called an ARM, is a mortgage plan in which the interest rate is subject to change throughout the lifespan of the loan. Generally, each year, the state of the market dictates whether the lending rate will increase or decrease.

To incentivize ARMs, they are generally offered with a short-term, fixed-rate period with a below-average interest rate. This guarantees homebuyers a certain amount of cost savings before the adjustable period begins.

How Does an Adjustable-Rate Mortgage Work?

Adjustable-rate mortgages operate according to their structure. Among the most popular ARM structures are:

  • 3/1
  • 5/1
  • 10/1

The first number in these structures represents, in years, the length of the initial, fixed-rate period. The second number represents, in years, how frequently the interest rate will fluctuate after that initial period ends.

What Drives Change in Adjustable-Rate Mortgages?’

One of the biggest concerns prospective ARM applicants have is about the index that drives change in their mortgage. An index is an economic indicator. At the end of each year, your lender or banker will take the index, add their fixed margin of profit, and the new sum will be your new rate of interest. There are many types of indexes, and each works slightly differently.

For most applicants, choosing an ARM structure and deciphering between indexes can be a dizzying task. Our seasoned mortgage brokers are here to help. We’ll lay out all your options in front of you, taking you through them systematically. With our expertise, you’ll be able to make an informed decision in full confidence.

What’s the Difference Between Adjustable-Rate Mortgages and Fixed-Rate Mortgages?

The difference between an adjustable-rate and a fixed-rate mortgage is straightforward: while the rate in an ARM changes each year, the rate in a fixed-rate mortgage stays the same from start to finish. The stability of a fixed-rate eliminates the possibility of saving money. With a fixed-rate mortgage, you know precisely the full amount you’ll pay at the time you sign the contract.

What Are the Pros and Cons of an Adjustable-Rate Mortgage?

The major pro of an adjustable-rate mortgage is the potential savings you can make if your interest rate goes down. On the whole, homebuyers with ARMs tend to spend less money overall on their mortgage. However, they must have a certain amount of risk tolerance—if their monthly payments go up, they should have the financial security to manage the change in their budget.

There’s no right or wrong answer when it comes to adjustable-rate mortgages. The right loan for you depends on your financial situation, goals, and preferences.

Learn More About Adjustable-Rate Mortgage Today

The significant cost-saving potential of ARMs makes them a highly intriguing option for homebuyers. If you’d like to learn more about the current adjustable-rate mortgages available in Mississauga, give our team of experts a call at (416) 258-0156.