If you ask a real estate investor if they prefer fixed versus variable rates they will almost always go with a variable. What most don't understand is that when the property is not your principal residence the cost of the interest is an expense that can be used to reduce tax payable.
However if you ask the average home owner/potential buyer what they would likely choose they lean towards the fixed rate, especially if a new home buyer, for the security of "knowing" what the payment will look like for the term.
It is not so easy as to say which one is better as it depends on the borrower's specific circumstance but some things to keep in mind that are important are:
1. You can always choose to go to a fixed rate at a later date.
2. Posted rates are almost never what the actual rate turns out to be.
3. What is your long term plan for the property and how does penalty/early payout calculate.
4. Stress Test your mortgage to ensure you can afford the payments based upon future economic stability/employment.
To discuss your strategies for real estate investment and potential passive income scenarios feel free to give us a call or register for our free monthly investor seminars.