For many of us, the purchase of a home will be the single, most significant investment we make in our lifetime. Along with the many decisions that come with buying a home, one of the first will be deciding between a fixed or variable rate mortgage.
In a recent online Facebook poll that Westoba conducted, 82 per cent of respondents told us they prefer fixed-rate mortgages over variable rate mortgages. These results are in line with industry averages.
As the name suggests, with a fixed rate, your mortgage rate and payments remain the same over the term of your mortgage agreement. With a variable rate mortgage, your rate and payments will change based on the prime lending rate set by your bank or credit union.
“The first question I ask members is whether they’re comfortable with the rate going up,” said Financial Consultant, Tristan Vera located at Westoba’s Portage Avenue location in Winnipeg. “Depending on your stage in life, a change in your monthly payments can add unnecessary stress.”
If a member prefers to have consistent payment amounts, then a fixed rate is likely the best option for them. However, if a member feels like they can handle potential fluctuations, they may want to go with a variable rate, which could result in lower payments if the rates remain low/stable. It really comes down to a personal choice.
If you’re unsure which option is right for you, make an appointment with one of our friendly, professional Financial Consultants or Mobile Mortgage Specialists, and we’ll help find a mortgage that works for you.
Quick reference guide for Fixed or Variable Mortgage Rates:
|Fixed||Interest rate and payments are fixed.||Easy to budget for and reduces uncertainty.||If rates drop, you may pay more for the security of fixed payments.|
|Variable||Fluctuates with changes in prime interest rate.||Can be less expensive if rates remain low/stable.||Must be able to tolerate financial uncertainty should rates increase during the term.|