Ontario Mortgage Agent Practice Exam

A fixed-rate mortgage is characterized by an interest rate that remains constant throughout the life of the loan. This stability means that the borrower can predict their monthly mortgage payments for the entire term of the loan, which is typically 15 to 30 years. This predictability is beneficial for budgeting and financial planning, as it protects the borrower from fluctuations in market interest rates during the mortgage period.

In contrast, fluctuating interest rates can lead to varying monthly payments, making it more challenging for homeowners to manage their finances. Options related to down payment requirements or property types, such as investment properties, do not specifically define what a fixed-rate mortgage is, as they pertain to other aspects of mortgage financing rather than the nature of the interest rate itself.