Fixed vs. Variable Mortgage: How to Choose in BC
One of the very first questions almost every client asks me is whether they should go fixed or variable. It is a big decision, and there is a lot of noise out there, so let's walk through it in plain language, with no jargon and no pressure.
The short version: a fixed mortgage locks your interest rate and payment for the whole term, giving you certainty. A variable mortgage moves with the lender's prime rate, which can save you money if rates fall but costs more if they rise. Neither is automatically better. The right choice comes down to your budget, your comfort with change, and how you sleep at night.
What a Fixed Mortgage Gives You
With a fixed rate, your interest rate and your payment stay exactly the same for your entire term, whether that is three years, five years, or longer. Rates could climb across the country and your payment would not move a dollar. For a lot of people, that predictability is worth everything. If you are on a tight budget, buying your first home, or you simply do not want to think about interest rates again until renewal, a fixed rate offers real peace of mind.
What a Variable Mortgage Gives You
A variable rate is tied to your lender's prime rate, so it moves up or down as prime changes. The appeal is potential savings, since variable rates often start lower, and historically they have worked out well for many borrowers over the long run. The trade-off is uncertainty. If prime rises, more of your payment can go to interest, or your payment itself can increase, depending on your mortgage. Variable tends to suit people who have some room in their budget and are comfortable riding out the ups and downs.
There is no universally right answer here, and anyone who tells you otherwise is guessing. My role is to help you understand the trade-offs clearly, then choose the option that fits your life and your comfort level.
Questions I Ask to Help You Decide
When we talk it through, I am really trying to understand a few things. How tight is your monthly budget, and could you handle a payment increase if rates rose? How would you feel watching rates move, would it stress you out or not bother you at all? How long do you plan to stay in this home? And what is happening in your life over the next few years? Your answers usually point clearly toward one option or the other.
You Are Not Locked in Forever
Here is something that puts many people at ease. Most variable mortgages let you convert to a fixed rate during your term if you decide you want certainty, so choosing variable is not a permanent commitment. And every term ends at renewal, which is a natural chance to reassess. This is a decision for now, not for life.
Not sure which is right for you? Let's talk it through with Rabinder Dhillon, with no pressure. I will explain both clearly and help you choose with confidence.
