Should You Choose a Fixed or Variable Rate For Your Mortgage Renewal?

Are you one of the many Canadian homeowners who face a mortgage renewal by 2026? Many are wondering what the best options are for their next term. Did you get burned with a variable rate mortgage in your last mortgage term? Or does it seem like the right option with interest rate drops predicted? Both fixed and variable rates have their pros and cons but your choice may be determined by what is happening in your life.

In this unpredictable market, it’s a good idea to talk to a professional mortgage broker like myself who can offer personalized advice and find you the best rates and options so you don’t have to go to every bank in the city to investigate. To help you make this decision, I’ve addressed a few of the most common mortgage questions I get, below.

What’s Happening With Interest Rates Can Affect Your Mortgage Renewal Choice

The Bank of Canada recently cut interest rates, which has people confused about the best mortgage option for their money and lifestyle. Right now in Barrie, the Bank of Canada's key rate is 4.25%, variable mortgage rates are around 5.3%, and fixed mortgage rates are about 4.39%.?

Money experts think interest rates will slowly go down until late 2025, unless something big happens with the economy. But don't expect rates to get as low as they were in the last 20 years. The question is, if you choose a variable rate mortgage now, will the interest rate be lowered enough to make up the difference from a fixed rate loan?

Choosing Between a Fixed or Variable Rate Mortgage Renewal

Choosing a variable mortgage means that you’re taking a gamble. Your rate may change with the Bank of Canada’s adjustments but there’s no way to predict how much that will be or how often it will happen. On the other hand, fixed-rate mortgages offer stability—your payments remain the same throughout your term, which can be reassuring if you’re dealing with life changes like a new job, marriage, or divorce.

The decision between a fixed or variable rate largely depends on your comfort with financial risk and your personal circumstances. If you prefer predictability, a fixed-rate mortgage may be a better fit, especially if you expect significant life changes during your mortgage term.

Other Mortgage Renewal Options to Consider

In addition to fixed and variable rates, there are several other mortgage options worth exploring:

• Short-term fixed rates: Lock in your rate for 1 to 3 years instead of the typical 5-year term. This way you may get a lower rate when you renew. However, you will pay a higher mortgage rate to take advantage of this.
• Hybrid mortgages: Combine both fixed and variable rates for flexibility so you get the best of both worlds.
• Convertible mortgages: Start with a variable rate and switch to a fixed rate before your term ends. Then if something in your life changes, you can lock in to a more stable option.

With housing prices still high, making the right choice for your mortgage renewal is more important than ever. Asking the right questions and getting answers from an experienced mortgage broker can help you weigh these options and find the best fit for your lifestyle situation.

Plan Ahead for Your Mortgage Renewal

Even though interest rates aren't as low as they used to be, you can still make smart choices to save money on your mortgage. The key is to think about your comfort with risk, your current life situation, and what's going on in the economy. These factors will help you choose a mortgage that fits your financial goals and lifestyle.?

It's a good idea to start looking at your mortgage options early, but be careful not to switch too soon, or you might face penalties. Talking to a mortgage broker makes it easier to find alternate lenders and better mortgage rates. They can show you options that banks don't always offer, making your decision easier.

Shop Around For The Best Renewal Option - It’s Stress Free

The federal government recently announced that they’re dropping the stress test requirement for switching your uninsured mortgage to a new lender when you renew. This means a lot of homeowners who are facing a mortgage renewal will now have more freedom to shop around for a better deal. And, with a good mortgage broker, you can find the best options – whether you choose a fixed or variable rate.

Is Your Mortgage Renewal On The Horizon? Fixed Or Variable, I Can Find You The Best Interest Rates!?

No matter if you go with a variable or fixed-rate mortgage for your renewal, it's a good idea to have an expert on your side. I can help you look at your options and your future life changes and find the right fit for your financial needs. Since the mortgage market is always shifting, working with an accredited mortgage broker, like me, can make things easier and save you money over time.

Call me and let's talk. With my expertise, I’ll make sure you get personalized advice and the right mortgage for you. Contact me at 705-315-0516 or book a consultation.? Instead of going it alone, let me help you lock in a mortgage that works for you!