Fixed or variable?

The ten questions

None of them is about rates. They are about how much room you have if the payment moves, which is the part a rate comparison cannot tell you.

1. 1. How stable is your income over the next five years?

   A variable rate asks you to absorb a payment change. Absorbing one is easier when you know what is coming in.

   Very stable: same job, predictable incomeSomewhat stable: could change, but no major shifts expectedUncertain: job changes, variable income, or self-employed
2. 2. What's your emergency fund situation?

   A cash buffer is what turns a rate rise into an inconvenience rather than a crisis.

   Strong: six or more months of expenses savedModerate: three to six months of expensesLimited: less than three months saved
3. 3. If your mortgage payment rose by $200 to $300 a month, how would that feel?

   This is the concrete version of the question. A rate change is abstract; a number leaving your account is not.

   I could handle it without stressI could manage, but would tighten my budgetIt would be very stressful
4. 4. What's your timeline for this mortgage?

   A short hold gives rates less time to move against you, and a penalty less time to matter.

   Short: planning to sell or refinance in three to five yearsMedium: likely keeping it five to ten yearsLong: keeping it ten years or more
5. 5. How do you feel about financial uncertainty?

   The premium on a fixed rate buys predictability. Whether that is worth paying for is a question about you, not about rates.

   I prefer predictability, even when it costs moreSomewhat comfortable with uncertainty if it saves moneyI'm comfortable taking calculated risks
6. 6. Do you have other variable-rate debt?

   Rates move together. A variable mortgage on top of a variable line of credit means one move hits you twice.

   No: this would be my only variable debtSome: a credit card or line of creditSignificant: multiple variable loans or credit lines
7. 7. Are you willing to monitor rates and act if they move?

   A variable rate rewards attention. If you will not be watching, you lose most of the upside and keep all of the exposure.

   Yes: I track finances and act on changesYes, but I would prefer to set it and forget itNo: I do not want to manage this actively
8. 8. Do you know your lender's payment cap terms?

   Some variable mortgages hold the payment steady and move the interest portion; others move the payment itself. The difference decides what a rate rise does to your month.

   Yes, and they are favourable: there are caps on increasesYes, and there are few or no capsNo: I have not reviewed this yet
9. 9. What's your mortgage size relative to your income?

   The same percentage rise costs more when the balance is bigger, and leaves less room when the income is already stretched.

   Conservative: less than three times annual incomeModerate: three to five times annual incomeStretched: more than five times annual income
10. 10. Is your partner aligned with your mortgage choice?

    A rate rise is harder to live with when it was not a joint decision.

    Yes: we agree on the approachStill discussing: we have different comfort levelsNot applicable: I am deciding on my own