Fixed vs Variable Mortgages in Canada: How to Think About the Choice

When you choose a mortgage, one of the biggest decisions is whether your interest rate should be fixed or variable. There’s no single right answer. The best choice depends on your budget stability and risk tolerance.

Fixed-rate mortgage (the “predictable” option)

• Your interest rate is set for the term (for example, 3 or 5 years).
• Your payments are usually steady and easier to plan around.
• You may pay a bit more for the stability, depending on the market.

Variable-rate mortgage (the “changes with rates” option)

• Your rate can move up or down as the market changes.
• Your cost can be lower at times, but it can rise too.
• This option can be stressful if you’re already close to your monthly limit.

Questions to ask yourself

• If payments went up, would your budget still work?
• Do you value predictability more than potential savings?
• How long do you expect to keep this home?
• Would you lose sleep if rates moved quickly?

Related: Mortgage Pre-Approval | Mortgages

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