Fixed or variable? Everyone has an opinion. Your uncle says fixed. Your coworker says variable. The truth is simpler than the debate.
Fixed means your payment stays the same. Variable means your payment can move with the bank rate. The best choice is the one that lets you sleep and keeps your budget safe.
The myth
Variable is always cheaper, so it is always better.
The truth
Variable can cost less over time, but it can also jump. Fixed costs more upfront for the safety of knowing your payment. The right choice depends on your sleep, not your uncle's opinion.
Fixed vs variable at a glance
These are general patterns. Your lender's exact terms matter. Ask them to show you the break costs.
Pick fixed if...
- You would lose sleep if your payment went up
- Your budget has very little room each month
- You are buying your first home and want one less surprise
- You plan to stay in the home for the full 5-year term
Pick variable if...
- You have savings to handle a payment jump
- You can track rates and adjust your budget
- Your income is stable or growing
- You are okay with some uncertainty for a chance to save
The real question
Do not try to predict interest rates. Even experts get it wrong. Instead, ask: "If my payment went up $200 next year, would my family be okay?" If the answer is no, fixed is probably your friend.
This is general education, not personalized financial or investment advice. Talk to a licensed advisor about your own situation.