Discussions

we have to decide whether to go with a variable mortgage for 3.85% or lock in for 4 years at 4,25 , which one makes sense  
 
Edited by pink82, 2025-11-06 10:21:10

Key Considerations  
Variable Rate (3.85%)  
Initial Rate - Lower  
Payment Stability - Fluctuates with prime rate  
Rate Outlook - May stay steady or slightly decrease  
Prepayment Penalty - Generally 3 months' interest (lower)  
Risk Tolerance - Requires comfort with market fluctuations  
 
Fixed Rate (4.25%)  
Initial Rate - Higher  
Payment Stability - Fixed for 4 years  
Rate Outlook - Rate is locked in  
Prepayment Penalty - Often IRD or 3 months' interest (potentially much higher)  
Risk Tolerance - Suitable for those prioritizing certainty and predictability  
 
Conclusion  
 
Choose the variable rate if you are comfortable with some risk, can manage potential payment fluctuations, believe rates will remain stable or fall further, and value the flexibility of lower break penalties.  
Choose the fixed rate if you prioritize budget certainty, cannot afford potential payment increases, and want protection against the risk of rising interest rates, even if it means higher initial payments and less flexibility.  
 
Edited by Livinthedream, 2025-11-06 11:29:07

Also remember you can negotiate the rate with your mortgage provider. Ask for the best rate they are willing to give you. You can also check with other mortgage providers.  
As a matter of chance, the advertisement that came up with this tread is from Westoba and it reads 4.09% over 5 years fixed rate. That's quite a bit closer to your variable rate quote.