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Variable vs. Fixed
Rate Mortgages

The rate you decide on will impact your mortgage payments, flexibility and savings goals. Here are some pros and cons — Don’t worry, i’m here to help!

Quick Answer...

Variable and fixed-rate mortgages in Canada are two common options for homeowners to choose from when securing a mortgage. The primary difference between these two types of mortgages lies in the interest rate structure:

  1. Fixed-Rate Mortgage:

    • Fixed-rate mortgages offer a consistent interest rate over the entire term of the loan. In Canada, fixed-rate terms typically range from 1 to 10 years, with the most common being 5-year terms.

    • With a fixed-rate mortgage, your interest rate remains the same, and your monthly mortgage payments also stay constant throughout the term. This provides predictability and stability, making it easier to budget for housing expenses.

    • Fixed-rate mortgages are a popular choice for homeowners who want to lock in a stable interest rate, protecting them from rising interest rates during their mortgage term.


  2. Variable-Rate Mortgage:

    • Variable-rate mortgages, also known as adjustable-rate mortgages (ARMs), have an interest rate that can change periodically during the mortgage term. In Canada, the interest rate on variable-rate mortgages is often tied to the Bank of Canada's prime lending rate.

    • Typically, variable-rate mortgages have a lower initial interest rate than fixed-rate mortgages. This means lower initial monthly payments, which can be advantageous if interest rates are expected to remain stable or decrease.

    • However, with a variable-rate mortgage, the interest rate can fluctuate as the prime rate changes. This means your monthly payments may go up or down over time, making it more challenging to budget for housing costs.


When deciding between a fixed-rate and a variable-rate mortgage in Canada, you should consider your financial situation, risk tolerance, and your outlook on interest rate trends:

  • If you value payment stability and are concerned about potential interest rate increases, a fixed-rate mortgage may be a better choice.

  • If you believe that interest rates will remain low or decrease over time, or if you're comfortable with the potential for fluctuating payments, a variable-rate mortgage might save you money in the short term.

It's important to note that some lenders also offer hybrid mortgage products, such as a "fixed-variable" mortgage, which combines elements of both fixed and variable rates. These products can offer a middle-ground solution, providing some interest rate stability while still benefiting from potential rate reductions. Be sure to carefully review your mortgage options, consult with me, your financial professional, and we will consider your long-term financial goals when making your decision.

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