What is a Variable Rate Mortgage?

A variable rate mortgage will fluctuate with the CIBC Prime rate throughout the mortgage term. While your regular payment will remain constant, your interest rate may change based on market conditions. This impacts the amount of principal you pay off each month. When rates on variable interest rate mortgages decrease, more of your regular payment is applied to your principal. Additionally if rates increase, more of your payment will go toward the interest.

A variable rate mortgage typically offers more flexible terms than a fixed rate mortgage. With the CIBC Variable Flex mortgage® you have the option to convert to a 3 year or greater fixed rate closed mortgage at any time, without a prepayment charge, should your needs change.

What determines the prime rate

Variable rates are linked to CIBC's Prime Rate, which is based directly on the Bank of Canada rate. The Bank of Canada is not a commercial bank and doesn't provide services to the public, instead their principal role, as defined in the Bank of Canada Act, is "to promote the economic and financial welfare of Canada."

Changes to the CIBC Prime rate

Changes to the CIBC Prime Rate are sometimes described in terms of increases or decreases in basis points. A basis point is a unit of measure that represents 1/100th of one percent (0.01%). For example, if interest rates are increased by 50 basis points, it means they were increased by 0.5%. The term basis point value simply denotes the change in the interest rate in relation to a basis point change.

Why a variable interest rate mortgage may be right for you:

  • You have a flexible budget and feel comfortable with fluctuating interest rates
  • You want to pay your mortgage off quickly

CIBC Variable Rate Open Mortgage

CIBC Variable Flex Mortgage®

Learn more about the mortgage rates offered at CIBC.

Apply for your variable rate mortgage

Interested in applying for a variable interest rate mortgage from CIBC? The first step is to get pre-approved.

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