A variable rate mortgage allows the borrower to take advantage of low rates – the interest rate is calculated on an ongoing basis at prime minus a set percentage. (Prime is the base rate that banks use in pricing loans to their best and most creditworthy customers.) A variable rate mortgage can pose challenges for some, such as financially stretched first-time buyers who may not be able to handle an increase in their mortgage payments that would usually accompany a significant rise in interest rates. And there are those who simply prefer the greater sense of stability that a five- to ten-year fixed term mortgage can provide.
Gunars Strauts--Origin Mortgage Group http://www.origingroup.ca