fixed vs variable mortgages

Fixed Vs. Variable Mortgages – What you Need to Know

As you may have recently read, The Bank of Canada has decided to hold its lending rate at a 22-year high of 5%. But what does this mean for your mortgage? And should the current economic climate affect whether you consider a fixed mortgage, or a variable mortgage?

First of all, for many with a mortgage, this hold is certainly welcome – this is because when market rates increase past a certain point, the interest payments you make to your lender may increase as well. When interest rates go down, however, more of your payment goes towards the principal (or the actual cost that you agreed to pay for the home). 

So, which is right for you? Fixed or Variable?

In truth, it really depends on you and your specific financial situation. But here is a brief break-down of the benefits and risks of each for your consideration:

Fixed Rate Mortgage

Your interest rate remains the same for the length of the mortgage term.


Predictability – It’s nice to know specifically when you’ll pay-off your mortgage, and the amount you budget for each payment never has to change. 

Simplicity – You won’t have to follow or analyze the market to know where your payments stand.


Initial fixed rates are often higher than variable-rates.

You’re locked into your interest rate for the entire mortgage term.

If you have to break your mortgage for any reason, penalties will likely be higher than with a variable-rate.

Variable Mortgage

Your interest rate can fluctuate along with the market.


The initial rates are often lower than with a fixed-rate.

If interest rates fall, more of your payments will go towards the principal (the actual cost of your home).

You can switch to a fixed-rate mortgage at any time.


If interest rates go up, as per The Bank of Canada, so will your payments, which could prolong the amortization period (or the time in which it takes to pay off your mortgage.)

As you can see, this is ultimately a decision that will reflect your personality and financial situation. The good news is, you’ll never have to make this decision alone! When you work with a trusted REALTOR®, you also gain access to a network of professionals. 

Wondering which kind of mortgage to get? Contact me today and let’s figure out what works best for you.