What is a mortgage rate?

A mortgage rate is the interest rate charged by a lender on a home loan (mortgage). It determines how much you’ll pay in interest on top of the principal loan amount when borrowing money to buy a home.

• Expressed as a percentage (e.g., 4.5% per year).
• It can be fixed (same rate for the life term of the loan e.g.,2, 3 or 5 years) or variable/adjustable (changes over time based on prime rate – market conditions).
• Influenced by factors like:
  • Your credit score
  • The loan term (e.g., 15 vs. 30 years)
  • Loan to Value or Down payment size

Example:

If you take out a $300,000 mortgage at a 4.19% annual interest rate for 30 years, you’ll pay interest on top of the $300,000, which adds significantly to your total repayment amount over time.

Let me know if you want a breakdown of how interest payments work over time or how to shop for a mortgage rate.