The "Fixed versus Variable Mortgage" quandary is a mortgage option for which there's no one right answer for everyone.
Although variable interest rates are typically lower than fixed mortgage rates, variable rate products are understood to be the more volatile of the two choices as rates could increase (or decrease) at any time without warning.
Here are some points to think through when considering your decision:
Your risk tolerance. Are you able to accept a fluctuating interest rate and still sleep at night? While variable mortgages have proved to be more financially beneficial in the long run over the past few years, this trend may or may not continue.
Your financial stability. Is your income and potential for increased earnings such that you could still comfortably cover your mortgage should rates increase through a variable mortgage?
Where you are in your home-buying history. A first-time homebuyer's budgeting experience is completely different from a long-time homeowner's. New homeowners may feel more comfortable foregoing the possible benefits of a variable mortgage for the stability of a five-year fixed-rate mortgage. This 'settling in' period can allow a new homeowner to find their financial equilibrium.
Please call today for more information on fixed and variable rate mortgages, and to find the best mortgage solution for your specific needs.