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Fixed or Variable Mortgage?

It’s the age-old mortgage debate. What do I do?  Do I take a fixed rate or do I take a variable rate? And when you announce to the world that you’re going to be buy your first home, everyone in your life is going to become an expert about what you should do with your mortgage. There’s really no right or wrong answer. It really comes down to you as a borrower and what you’re most comfortable with.

Fixed rate mortgages are fixed or locked in for a certain period of time, normally for a five-year period (in Canada). And a fixed rate mortgage can be right for you if you’re the type of person that just needs to know what your payments are going to be every month for the next five years without change.

Variable rate mortgages are linked to what we call the prime lending rate and can vary whenever the Bank of Canada decides to move the rate, usually by up to a quarter of one percentage point. A variable rate mortgage is a great idea for someone who can tolerate a little bit of change and is open to some strategies for saving money. You can convert your variable rate mortgage into a fixed rate mortgage at any time with literally a phone call.

The important thing is to remember, though, is that no matter what someone else did with their mortgage, it shouldn’t have any bearing on what you’re going to do with your mortgage. Everybody’s personal financial situation is completely different, and you have to focus on your needs only when we’re talking about the largest debt that you will ever have.

When you sit down with your Sparrow Team specialist, we’re going to give you the information you need to make the decision that is right for you.