Fixed or Flexible: Which Refinance Option Fits You?

When you refinance, one of the bigger decisions you'll make is choosing between a fixed rate and a flexible (variable) rate. Both are completely valid choices. The right one just depends on what fits your life and comfort level. Here's a simple breakdown.

What a fixed rate means

With a fixed rate, your interest rate stays exactly the same for the entire term of your mortgage. Your payment amount doesn't change, no matter what happens in the broader economy.

Fixed rates tend to appeal to homeowners who:

• Like knowing exactly what their payment will be every month
• Want predictability for budgeting
• Prefer not to think about rate changes at all

What a flexible (variable) rate means

With a flexible rate, your interest rate can move up or down over time, based on broader market conditions. Your payment might change as a result, either getting smaller or larger.

Flexible rates tend to appeal to homeowners who:

• Are comfortable with some ups and downs
• Want the potential to benefit if rates drop
• Have some wiggle room in their budget to handle changes

Neither option is "better"

This isn't a case of one option being smarter than the other. It really comes down to your personality and your finances. Some people sleep better at night knowing their payment will never change. Others are comfortable riding out some ups and downs in exchange for potential savings.

A few questions to help you decide

• Does the idea of my payment changing stress me out, or not bother me much?
• Do I have some flexibility in my monthly budget if payments went up temporarily?
• Am I more focused on predictability or potential savings?

Getting a recommendation that fits you

There's no one-size-fits-all answer here, which is exactly why it helps to talk it through with someone who understands your full picture. Reach out to Ken Tucker to discuss your unique situation, and get an honest recommendation based on your comfort level and goals, not a generic answer.

Book a free call by clicking here or call 416-988-5626.

Learn more about how refinancing can help in our Refinance blog series here.