Which is better, variable or fixed-rate mortgage?

Which is better, variable or fixed-rate mortgage?

Which is better, variable or fixed-rate mortgage?

This has been a long-debated topic and a pressing question for many Canadian homeowners. Have you thought about what type of product you want for your mortgage?

According to Canadian Real Estate Magazine, 80% of Canadians chose the security of a fixed rate over a variable-rate. While there are pros and cons for both types of mortgages, we can help you understand them better.

Fixed-Rate mortgages are “set and forget” for the duration of the mortgage term. The mortgage payments and interest rate will not change.


-Offers stability when it comes to budgeting expenses

-Your payments remain the same regardless of whether interest rates rise


-Greater penalty if you choose to break your mortgage agreement early

-If the difference between the variable and fixed rate is significant, it may not be worth paying the premium

My rule of thumb is there must be approximately a 1.00% spread between fixed and variable rates to take a variable rate mortgage.

Variable Rates fluctuate with the “prime rate.” Meaning the interest portion of the mortgage payment varies.


-Proven to be less expensive over time

-Often lower interest rates than fixed-rate mortgages

-Lower penalties if you choose to break your mortgage early


-Less financial certainty

-You need to monitor your mortgage a bit closer

-A significant increase in the prime rate will increase your mortgage payment 

Generally speaking, if interest rates are relatively low, but are about to increase, then it will be better to lock in your mortgage at that fixed-rate. On the other hand, if interest rates are on the decline, it would be better to have a variable-rate mortgage.

I’m here to help you find the best suitable mortgage that meets your financial goals. Contact me today to chat about which option works best for you! 

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