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  • Writer's pictureAshleigh Holtman

Exploring Your Mortgage Options: Embracing the Dynamic Dance Between Fixed and Variable Rates

Updated: Apr 24

Let’s talk about mortgages.


You’ve got the classics: fixed-rate and variable-rate. But what sets them apart?


A fixed-rate mortgage is your steadfast companion, never wavering in its commitment to a set interest rate. No surprises here. On the other hand, a variable-rate mortgage is a bit more fluid, mirroring the ebb and flow of interest rates in the market. Your principal stays put, but the interest rate can shimmy up or down.


As of now, variable rates are on the higher side, but there's hope on the horizon. Market indicators suggest a potential downturn in June or July of 2024, offering a window of opportunity for those considering variable-rate mortgages.


The Perks of a Fixed Rate


Stability is the name of the game with fixed-rate mortgages. Here's why they're a hit:


  1. Predictable Payments: Say goodbye to financial rollercoasters. With a fixed rate, your payments stay steady, making budgeting a breeze.

  2. Shield Against Rate Hikes: Lock in your rate and lock out the worries of rising interest rates.

  3. Long-Term Planning: Looking to the future? Fixed rates provide the stability needed to focus on your long-term financial goals.

But beware, there are trade-offs:


  1. Missed Savings: If market rates drop post-lock-in, you won't reap the benefits unless you refinance, which can come with its own costs.

  2. Potential for Higher Costs: Over time, you might fork over more in total interest compared to variable-rate counterparts if rates stay low.

So, fixed-rate mortgages are your go-to for financial security and peace of mind.


Unlocking the Potential of Variable Rates


Considering the variable-rate route? Here’s the scoop:


  1. Market Sensitivity: Variable rates respond to market fluctuations, offering potential advantages during favourable periods.

  2. Adaptive Nature: Variable rates adapt to market shifts, giving you more maneuverability.

  3. Speedy Principal Paydown: Thanks to lower initial rates, more of your payment can chip away at the principal.

But hold your horses, there are pitfalls:


  1. Uncertain Terrain: Brace yourself for rate unpredictability, akin to navigating Canadian autumn weather.

  2. Potential for Payment Spikes: If rates climb, so do your payments.

  3. Budgeting Hurdles: Fluctuating rates can throw a wrench in your budgeting efforts.

  4. Risk of Higher Costs: Persistently high rates could leave you shelling out more in total interest.

Variable rates are for the risk-takers who thrive on flexibility and potential savings.


Choosing Your Path: Fixed or Variable?


The million-dollar question: fixed or variable?


Opt for a fixed-rate mortgage if stability is your jam. It’s your ticket to a smooth ride through the loan term, ideal for low-interest environments and risk-averse individuals.


But if you’re game for a bit of risk and the prospect of savings, consider a variable-rate mortgage. It’s a dance with uncertainty, but for those with a higher risk tolerance, the rewards can be sweet.

In the end, it’s all about aligning your mortgage choice with your unique financial goals and risk appetite.


Feeling lost? I have your back. Reach out today to explore your fixed and variable-rate mortgage options with me!


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