Choosing between a fixed and a variable rate is one of the biggest decisions in a mortgage. There is no universal right answer, only the option that suits your circumstances.
How a fixed rate works
With a fixed rate, your interest rate stays the same for the whole term. Your payment is predictable, which makes budgeting easier. The trade-off is that fixed rates are usually set with the lender’s view of the future built in, and breaking a fixed mortgage early can carry a higher penalty.
How a variable rate works
A variable rate moves with the lender’s prime rate. Depending on the product, either your payment changes or the share of each payment that goes to interest changes. Variable mortgages often have simpler, lower penalties if you break early.
Questions to ask yourself
- Would a payment increase strain my monthly budget?
- Do I plan to stay in this home for the full term?
- Do I have a cushion if rates rise?
A broker can compare both
Because a broker works with many lenders, you can see fixed and variable options side by side and pick based on the whole picture, not only the headline rate.
Talk to a Langley Mortgage Broker
Every file is different. If you would like to talk through your own situation, the team at M. Abdullah Mortgages is happy to help. Get in touch or start your application online.
This article is general information, not personal financial or legal advice. Rates, rules and lender policies change, so confirm the current details for your situation before making a decision.
