Can You Lock a Variable Mortgage Into a Fixed Rate?

If you have a variable-rate mortgage, you might be wondering: Can I lock into a fixed rate during my mortgage term?

Absolutely. But there are a few things you should understand before deciding to make the switch.

The first thing to know is that you don’t lock in at your current variable rate. For example, if your variable rate is currently 3.75%, that doesn’t mean you can switch to a fixed mortgage at 3.75%. Instead, your lender will offer you a fixed rate based on the fixed rates available at that time and the term options they offer.

The second thing to consider is how much time you have remaining on your mortgage term. Depending on your lender, you may need to choose a fixed term that is equal to or longer than the time remaining on your current term. So, if you have three and a half years remaining, for example, you may need to move into a four-year fixed term rather than a three-year term. That could mean being committed to your mortgage for longer than you originally expected.

The last—and often hardest—part is deciding when to lock in. A lot of people choose a variable mortgage thinking they’ll lock into a fixed rate once rates come down or before they start going back up. The problem is that no one knows exactly when rates have reached the bottom. Will they continue to drop? Are they about to increase? It’s very difficult to time perfectly.

That doesn’t mean choosing a variable mortgage is a bad idea or that you shouldn’t lock into a fixed rate later. It simply means you should understand how the process works before choosing a variable mortgage with the plan of locking in down the road.

If you’re considering making the switch, it’s worth looking at the fixed rate being offered, the term you’ll be committing to, and whether locking in makes sense for your plans before making the decision.