Interest rate considerations:
Fixed rate mortgage: Your interest rate and payment stay fixed over the term of the mortgage. Because interest stays the same, you know exactly when your mortgage will be fully paid off and how much you’ll pay each month. The initial interest rate is often higher than a variable interest rate, and you’re locked in for the term of the mortgage.
Variable rate mortgage: Your interest rate will fluctuate depending on your lender’s prime lending rate. If the prime rate falls, your interest rate may as well, meaning more of your payments will go towards paying the principle. Conversely, if the prime rate increases, less of your payment will go towards the principle, lengthening the amortization period.
Hybrid: This type of mortgage arrangement allows a borrower to split their mortgage between fixed and variable components, with the most common percentage between 50-50.