WHAT KIND OF RATE SHOULD I CHOOSE?
Depends on your situation.
One of the most common questions we hear is “Should I go for a fixed rate or a variable rate?” It’s a great question, but unfortunately our answer is usually the same: “Well, it depends…”
For a lot of people, that’s a frustrating response. But it’s not a cop-out, we promise. The fact is, it’s a very personal decision, and it honestly does depend. On your finances. On your personal preference. On your risk tolerance.
As we discussed in previous blog posts, variable rates are usually lower than fixed rates, so if you want a lower payment today, go for that. Fixed rates will give you predictability for the length of your term, however – many experts (including Bank of Canada’s Mark Carney) are predicting a rise in the rates in the next couple of years. If the guy who calls the shots says rates might go up, chances are they will. Thus, if you like consistency and get a decent fixed rate, you might want that.
Still not sure? It’s kind of like when Apple puts out that new iProduct. Some people line up at the Mac store to get it on the first day, knowing that six to nine months from now that price might go down, or an even newer version might come out.
These folks probably choose a variable rate – they get the shiny low rate now, even though it might not stay the same for the whole term.
Other people are happy with a slightly older version of the iProduct, and wait for the price drop and a few software upgrades in the new one. They’re a little more cautious about their purchases, and therefore lean toward the fixed rate.
The bottom line is, don’t let “well, it depends” get you down.We collect a lot of information before making a recommendation one way or the other. Even then, we will present you with a couple of options and leave it up to you.