The fixed-versus-variable debate is usually framed as a prediction. It should be framed as a question about your own tolerance and timeline.
Start with your five-year plan
If there is a real chance you sell, refinance or relocate mid-term, penalty structure matters more than the rate. Variable penalties are typically three months' interest. Fixed penalties use an interest rate differential that can be many times larger.
Then price your tolerance
A variable payment can move. Ask yourself what a payment increase of a few hundred dollars would do to your month. If the honest answer is that it would cause stress, the fixed premium is buying something worth having.
Consider term length as a third lever
The choice is not only fixed or variable. A three-year fixed can be a middle path: rate certainty without committing five years to today's pricing.
What the spread actually tells you
When fixed and variable pricing sit close together, variable carries less compensation for its risk. When the gap is wide, variable is being paid to accept uncertainty. That is information, not a forecast.
Decide on your timeline and your tolerance first, then let the current spread break the tie.
Want this applied to your own numbers?
Call Phil Cragg at 866-349-4915 or request a written comparison.
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