Fixed vs Variable Rate Mortgages: Which is Right for You

Fixed or variable is the first question every borrower asks and the one with the least honest public discussion. Here's the version without a sales agenda.

What you're actually choosing

A fixed rate locks your cost for the term, you're buying certainty, and paying a premium over the market's rate expectations for it. A variable rate floats with your lender's prime rate, historically cheaper on average, but your cost (or your amortization) moves when the Bank of Canada moves.

The penalty difference nobody advertises

Break a variable early and the penalty is three months' interest, modest. Break a big-bank fixed mid-term when rates have fallen and the interest-rate-differential penalty can run five figures. Since a majority of five-year mortgages are broken or changed before maturity, sale, divorce, refinance, relocation, the penalty math deserves as much weight as the rate itself.

Choose based on your life, not a forecast

• Choose fixed if a payment jump would genuinely strain the budget, you're stretched thin at qualification, or certainty simply lets you sleep.
• Choose variable if you have cash-flow cushion, a decent chance of selling or refinancing mid-term, or you want the cheap exit option.
• Split and shorter terms exist too: a 3-year fixed prices flexibility differently than a 5-year, and hybrid mortgages hedge the bet.

The honest scoreboard

Long-run studies famously favour variable, most of the time. But 2022 taught variable holders what 'most of the time' excludes, and 2024-25 taught fixed holders locked at peaks the mirror lesson. Nobody, not your bank, not your broker, not the economists, reliably calls the turn. What can be known is your budget's tolerance, your timeline and your exit odds. That's what the decision should run on.

Bring us your renewal date or purchase timeline and we'll price fixed, variable and the terms in between across 70+ lenders, with the penalty clauses read before you sign, not after.

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