Mortgage Rate Myths in 2025: Don’t Fall for These Common Misconceptions

With so much online advice, it’s easy to fall for mortgage myths. Let’s bust a few:

❌ Myth: Fixed rates are always safer

In reality, a variable rate may save money in a falling rate environment — if you’re comfortable with the risk. For instance, a borrower with a variable mortgage in early 2024 saved thousands compared to fixed-rate holders. This is because fixed rates lock you into a set payment for the duration of your term, which can be beneficial in a rising rate environment.

However, if interest rates decline, those with fixed rates miss out on potential savings. Furthermore, variable rates often start lower than fixed rates, providing immediate savings that can accumulate over time. It’s essential to assess your financial situation and risk tolerance before deciding which option is best for you.

❌ Myth: You can’t negotiate at renewal

Your lender’s first renewal offer is rarely their best. In fact, many borrowers are unaware that they can negotiate terms and rates at renewal. Shopping around can save you thousands over a new term — and switching at renewal is usually penalty-free. Lenders often provide competitive offers to retain customers, so it’s advantageous to compare rates from different institutions.

Additionally, understanding your current mortgage terms and market conditions can empower you to negotiate better terms. Engaging a mortgage broker can also provide insights into the best available rates and help you leverage your position during negotiations.

❌ Myth: 20% down is always best

While 20% down avoids mortgage insurance, some buyers benefit from smaller down payments that free up cash for renovations, emergencies, or investments. A smaller down payment allows you to maintain liquidity, which can be crucial for unexpected expenses or opportunities.

Moreover, with the right financial planning, you can invest those funds elsewhere, potentially yielding higher returns than the cost of mortgage insurance. It’s important to evaluate your overall financial goals and consider whether a larger down payment aligns with them.

Consulting with a financial advisor can help you make an informed decision based on your unique circumstances.

💡 Tip:

A mortgage broker helps you look past myths and focus on what’s right for your personal financial situation. We can provide tailored advice, access to a wide range of lenders, and insights into the current market trends.

By working with a broker, you can better navigate the complexities of mortgage options and find solutions that meet your needs, ultimately leading to a more favorable financial outcome.