Should I go with a fixed mortgage or a variable one? It’s a question I hear a lot—and one that doesn’t have a straight answer. While, historically speaking, variable-rate holders have come out on top about 90% of the time, they’re significantly less predictable. And at the end of the day, you have to choose the mortgage that your household is most comfortable with.
If you’re thinking about going variable, don’t attempt to predict the future. Look at the rate you’re being offered right now and base your decisions off of it. Next, crunch the numbers based on your household’s current financial situation and determine how high you could comfortably go should interest rates rise. Ideally, you should be able to weather a two percent interest rate increase.
If variable rates still make you nervous, you have other options beside the 5-year fixed. Lower terms—such as 2- or 3-year terms—also come with a lower rate, and give you more flexibility to change course should the interest rate landscape improve. That being said, it goes the other way too—interest rates could be higher upon renewal.
Your best bet? Give me a call. I’ll take time to learn about your situation and comfort level and discuss your options. The fixed vs variable decision is ultimately yours to make–but it isn’t one you have to make alone. Often, unbiased, educated advice is all you need to see the answer clearly–and select a mortgage you can feel happy about.