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Should You Choose a Variable or Fixed Rate Mortgage?

You’ve found a beautiful home to call your own, but now it’s time to hunt for financing. You could just take whatever loan your lender will give you, or you could hunt for the best bargain.


Getting the best deal always starts with understanding the difference between mortgage types, most importantly a variable rate mortgage and a fixed rate mortgage. Each one has its benefits and drawbacks, so you’ll want to read carefully and work with a financial advisor or Canada mortgage broker to make sure you’re getting what’s right for you.

There’s a Big Difference between the Two

A fixed rate mortgage stays the same through the life of your loan; if you get a 25 year mortgage today at 4% interest, 20 years from now you’ll still pay 4% interest. A variable rate mortgage depends more on the prime rate set by the Bank of Canada. As long as the interest rates remain low, your interest rate will stay low. The moment inflation sets in though, you’ll have to pay more. Depending on how you want to repay and what your borrowing needs are, you’re going to need a different type of mortgage.

Variable Rate Mortgages Offer Flexibility

If you need a lower payment to start, a lot of money up front and if you can pay off your mortgage before the term ends (usually less than 5-10 years), this is the mortgage for you.

But like everything else, there are downsides to every type of financing. Your payments and interest rate can fluctuate wildly, making it hard to predict when you’ll be able to pay it off in full. Some even have interest rates that double within the first 3 years, so you’ll want to work with a broker before you choose this kind of Canadian mortgage.

Fixed Rate Mortgages Offer Long Term Stability

Fixed mortgages are some of the best Canadian mortgages. You’ll always know what your interest rate is going to be, you won’t have to worry about a big change all of a sudden, but there are downsides. Your payments can be much higher than they would be with a variable rate, and it can be hard to qualify for these kinds of mortgage (20% down payment, stricter credit guidelines) that can make it hard to get one.

What’s in Your Future?

Depending on your needs, you may want to go with a fixed rate Canadian mortgage or with a variable rate Canadian mortgage. It all depends on what you need – to find out have a candid conversation with a mortgage broker. See if they can help you find the right lender and rate for you. After all, you only get one chance to make it right so you may as well get it right from the start. Know your options before you sign on the dotted line, and understand all that’s available to you; it can be easy getting sucked into the wrong kind of mortgage, so be careful!

Homebase Mortgages is a leading Toronto mortgage brokerage, which specializes in all types of mortgages including second mortgages, private mortgages, mortgage refinancing, mortgage renewals and home equity loans and lines of credit. To learn more about mortgage options that are right for you, please visit them at:


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