Real estate loans: fixed rate or variable rate

The fixed rate loan

The credit rate remains unchanged for the entire term (link to term of the real estate loan) of the loan.
The borrower can choose between :

• a constant maturity date: the monthly payment amount never changes
• or a progressive maturity date: the payment amounts increase or decrease at a pace determined at the time of signing
• or an adjustable maturity date: the borrower defines monthly payment amounts according to his/her cash flow

The fixed rate loan is very safe. Its major inconvenience relates to the penalties applied for early payment.

The variable or revisable rate loan

The interest rate is likely to vary according to what the market is doing. Riskier, the variable rate loan offers the possibility of being able to pay your credit early with no penalties.
The borrower can choose the capped variable rate, which sets a maximum payment ceiling. The commencing rate is not as good but risk is lower.