Variable Rate Mortgage Holder? It Could Take Up To 40 Years Longer To Own Your House Thanks To Today’s Rate Increase

MONTREAL, Dec. 07, 2022 (GLOBE NEWSWIRE) — In a time when all choices look bleak for variable rate holders thanks to another 50 bps increase by Bank of Canada announced today, there is one lesser-known mortgage type that comes across as a better option: Adjustable Rate Mortgages (ARMs). As more than 50% of Variable Rate Mortgage (VRM) holders are expected to reach their trigger points in 2023, thereby making their time-to-payoff loan extended by 40 years or more, ARM holders will remain on their preset track to home ownership.

In fact, now more than ever an ARM can come out as the stronger option for potential homeowners seeking a variable mortgage or current homeowners due for a renewal.

Why? According to nesto’s own report, when comparing a Variable Rate Mortgage to an Adjustable Rate Mortgage over a 5-year term on a $100,000 loan at 25-years amortization, the impact of the 50 bps increase to the prime rate seen today results in:

  1. +$68 more in interest accrued on VRM than ARM
  2. +$5,812 more principal paid down in ARM than VRM end-of-term.
  3. +40 years sooner pay off with ARM than VRM.
  4. +$36.46 in monthly payment savings for ARM vs. VRM at time of renewal.

In short, the choice is: Risk higher payments with an ARM in the short term and own your home outright with more equity in the long term, or opt for static, fixed payment on a VRM but run the risk of being unable to change lenders at maturity, higher payments at renewal and a longer timeframe to outright own your home.

“At nesto, our goal has always been to help homeowners feel secure with their mortgage, which is why we chose to only offer ARMs. As we already see many VRM holders reaching their their trigger rates, those who have secured their mortgage with nesto will not have to worry about this,” says Chase Belair, Co-Founder and Principal Broker of nesto, “While their payments adjust with the prime rate movement, they remain on track to pay down their loan, have home equity, and all the while have more peace of mind and flexibility at renewal time.”

About nesto: Unlike other mortgage brokers or banks in Canada, nesto is Canada’s first digital mortgage platform, that has core human expertise, and a transparent, convenient, technology-first property financing experience—simplified from start to finish. Visit for more information.

Contact details:
Alivia Massimillo
Email: [email protected]
Phone: 516-398-2513

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