With interest rates at record lows, choosing between a fixed or variable rate mortgage has never been harder. So, which one should you go with?
The answer is one you probably won't like: It purely depends on your specific financial position and comfort level. Plain and simple.
If, for example, you can weather a slight increase in mortgage payments, you should definitely go for the variable rate. You're never going to see rates lower than this. If you can opt for a variable but set your payments as if you were paying the going fixed rate, you'd not only be protecting yourself from the shock of future increases, but you'd be banking a ton of extra money per month towards your principal.
On the other hand, if you're not extremely eager to take on risk, a fixed rate might be the way to go. Sometimes a five-year fixed rate is the best option if you want to set a budget and know exactly what to expect over the next five years. The thing is, sometimes a four-year fixed rate will work just fine too. Most people don't stay in their first home for more than five years, and the four-year terms occasionally come at a lower rate. At the same time, if you don't see yourself moving over the next decade or so, a 10-year option might be your best bet.
The point is that mortgages are not one-size-fits-all. To find out which option is best for you, give us a call. We'd love to help.