Fixed vs. Variable Mortgage Rates in Canada

Tanya Toye • December 17, 2025

Fixed vs. Variable Rate Mortgages: Which One Fits Your Life?

Whether you’re buying your first home, refinancing your current mortgage, or approaching renewal, one big decision stands in your way: fixed or variable rate? It’s a question many homeowners wrestle with—and the right answer depends on your goals, lifestyle, and risk tolerance.


Let’s break down the key differences so you can move forward with confidence.


Fixed Rate: Stability & Predictability

A fixed-rate mortgage offers one major advantage: peace of mind. Your interest rate stays the same for the entire term—usually five years—regardless of what happens in the broader economy.

Pros:

  • Your monthly payment never changes during the term.
  • Ideal if you value budgeting certainty.
  • Shields you from rate increases.

Cons:

  • Fixed rates are usually higher than variable rates at the outset.
  • Penalties for breaking your mortgage early can be steep, thanks to something called the Interest Rate Differential (IRD)—a complex and often costly formula used by lenders.

In fact, IRD penalties have been known to reach up to 4.5% of your mortgage balance in some cases. That’s a lot to pay if you need to move, refinance, or restructure your mortgage before the end of your term.


Variable Rate: Flexibility & Potential Savings

With a variable-rate mortgage, your interest rate moves with the market—specifically, it adjusts based on changes to the lender’s prime rate.


For example, if your mortgage is set at Prime minus 0.50% and prime is 6.00%, your rate would be 5.50%. If prime increases or decreases, your mortgage rate will change too.

Pros:

  • Typically starts out lower than a fixed rate.
  • Penalties are simpler and smaller—usually just three months’ interest (often 2–2.5 mortgage payments).
  • Historically, many Canadians have paid less overall interest with a variable mortgage.

Cons:

  • Your payment could increase if rates rise.
  • Not ideal if rate fluctuations keep you up at night.


The Penalty Factor: Why It Matters More Than You Think

One of the biggest surprises for homeowners is the cost of breaking a mortgage early—something nearly 6 out of 10 Canadians do before their term ends.

  • Fixed Rate = Unpredictable, potentially high penalty (IRD)
  • Variable Rate = Predictable, usually lower penalty (3 months’ interest)


Even if you don’t plan to break your mortgage, life happens—career changes, family needs, or new opportunities could shift your path.


So, Which One is Best?

There’s no one-size-fits-all answer. A fixed rate might be perfect for someone who wants stable budgeting and plans to stay put for years. A variable rate might work better for someone who’s financially flexible and open to market changes—or who may need to exit their mortgage early.

Ultimately, the best mortgage is the one that fits your goals and your reality—not just what the bank recommends.


Let's Find the Right Fit

Choosing between fixed and variable isn’t just about numbers—it’s about understanding your needs, your future plans, and how much financial flexibility you want.


Let’s sit down and walk through your options together. I’ll help you make an informed, confident choice—no guesswork required.


Tanya Toye

Mortgage Broker

GET STARTED

Smart Steps to Get Your Home Market-Ready

By Tanya Toye • February 11, 2026
Thinking About Selling Your Home? Start With These 3 Key Questions Selling your home is a major move—emotionally, financially, and logistically. Whether you're upsizing, downsizing, relocating, or just ready for a change, there are a few essential questions you should have answers to before you list that "For Sale" sign. 1. How Will I Get My Home Sale-Ready? Before your property hits the market, you’ll want to make sure it puts its best foot forward. That starts with understanding its current market value—and ends with a plan to maximize its appeal. A real estate professional can walk you through what similar homes in your area have sold for and help tailor a prep plan that aligns with current market conditions. Here are some things you might want to consider: Decluttering and removing personal items Minor touch-ups or repairs Fresh paint inside (and maybe outside too) Updated lighting or fixtures Professional staging Landscaping or exterior cleanup High-quality photos and possibly a virtual tour These aren’t must-dos, but smart investments here can often translate to a higher sale price and faster sale. 2. What Will It Actually Cost to Sell? It’s easy to look at the selling price and subtract your mortgage balance—but the real math is more nuanced. Here's a breakdown of the typical costs involved in selling a home: Real estate agent commissions (plus GST/HST) Legal fees Mortgage discharge fees (and possibly a penalty) Utility and property tax adjustments Moving expenses and/or storage costs That mortgage penalty can be especially tricky—it can sometimes be thousands of dollars, depending on your lender and how much time is left in your term. Not sure what it might cost you? I can help you estimate it. 3. What’s My Plan After the Sale? Knowing your next step is just as important as selling your current home. If you're buying again, don’t assume you’ll automatically qualify for a new mortgage just because you’ve had one before. Lending rules change, and so might your financial situation. Before you sell, talk to a mortgage professional to find out what you’re pre-approved for and what options are available. If you're planning to rent or relocate temporarily, think about timelines, storage, and transition costs. Clarity and preparation go a long way. The best way to reduce stress and make confident decisions is to work with professionals you trust—and ask all the questions you need. If you’re thinking about selling and want help mapping out your next steps, I’d be happy to chat anytime. Let’s make a smart plan, together.

Mortgages Aren’t One-Size-Fits-All

By Tanya Toye • February 4, 2026
Why the Cheapest Mortgage Isn’t Always the Smartest Move Some things are fine to buy on the cheap. Generic cereal? Sure. Basic airline seat? No problem. A car with roll-down windows? If it gets you where you're going, great. But when it comes to choosing a mortgage? That’s not the time to cut corners. A “no-frills” mortgage might sound appealing with its rock-bottom interest rate, but what’s stripped away to get you that rate can end up costing you far more in the long run. These mortgages often come with severe limitations—restrictions that could hit your wallet hard if life throws you a curveball. Let’s break it down. A typical no-frills mortgage might offer a slightly lower interest rate—maybe 0.10% to 0.20% less. That could save you a few hundred dollars over a few years. But that small upfront saving comes at the cost of flexibility: Breaking your mortgage early? Expect a massive penalty. Want to make extra payments? Often not allowed—or severely restricted. Need to move and take your mortgage with you? Not likely. Thinking about refinancing? Good luck doing that without a financial hit. Most people don’t plan on breaking their mortgage early—but roughly two-thirds of Canadians do, often due to job changes, separations, relocations, or expanding families. That’s why flexibility matters. So why do lenders even offer no-frills mortgages? Because they know the stats. And they know many borrowers chase the lowest rate without asking what’s behind it. Some banks count on that. Their job is to maximize profits. Ours? To help you make an informed, strategic choice. As independent mortgage professionals, we work for you—not a single lender. That means we can compare multiple products from various financial institutions to find the one that actually suits your goals and protects your long-term financial health. Bottom line: Don’t let a shiny low rate distract you from what really matters. A mortgage should fit your life—not the other way around. Have questions? Want to look at your options? I’d be happy to help. Let’s chat.