One of the first decisions you’ll face when applying for a mortgage in Canada is rate type: fixed or variable. Both have advantages — your choice depends on your financial comfort and risk tolerance.
Fixed-rate mortgages
With a fixed rate, your interest rate — and monthly mortgage payment — stays the same for the term of the loan. You’ll know exactly what you pay each month, and plan your budget without surprises. This setup is ideal if you value stability, have a fixed income, or want a predictable payment schedule.
Variable-rate mortgages
Variable rates fluctuate over time because they’re tied to a benchmark rate set by banks (often the “prime rate”). As the benchmark shifts, so does your mortgage rate. When rates fall, you can save on interest. When rates rise — payments increase.
Many Canadians choose variable rate for potential savings, especially if they plan to pay off the mortgage faster or can handle some uncertainty. But it’s important to understand the risks.
How to decide which rate is right for you?
Ask yourself:
- Can you afford higher payments if rates rise?
- Do you prefer predictable budgeting over possible savings?
- Is your income stable or likely to change soon?
- Are you planning to stay long-term or might move in a few years?
If you like certainty — fixed rate offers peace of mind.
If you’re open to some fluctuation and long-term savings — variable rate could save you money.