Comparing Variable and
Fixed Rate Mortgages


Attempting to navigate and understand the mortgage world can be a daunting task. There’s a lot of information and numbers to sort through. One of the decisions you might be making is whether to do with a fixed rate or variable rate mortgage. I’ll help you look at the two types of rates types that might be available to you so that you can make an informed decision. Read on to learn more!


Fixed Rates

A fixed rate means that your mortgage interest rate and payment will remain the same through the mortgage term. The main pro of having a fixed mortgage rate is that it can offer you peace of mind in regards to knowing how much your payment will be each month. On the other hand, if there is a big enough difference between the variable rate and fixed rate, it might not be worth the financial stability and peace of mind that comes with a fixed rate mortgage term.

Rates in Canada: 1986-2010


Variable Rate

With variable rates, the interest rate will fluctuate if the prime rate changes. Consequentially, depending on the terms of your mortgage, the payment or interest portion of your mortgage will vary. Historically, variable interest rates have proven to be less expensive. However, there is uncertainty involved with choosing this type of mortgage. If the mortgage rates increase, your financial burdens will also increase.

Rates in Canada: 2008-2016


So which one should you choose?

Choosing a variable or fixed term mortgage is heavily dependent on your current circumstances and an assessment of your future circumstances. Would you be able to sustain an increase in interest rates? Are you the type of person who would constantly fret over interest rates changing? There are many questions to ask. You can also assess your current earnings and look at your potential future earnings. It is best to sit down with a mortgage professional who will help you plan out your long term goals and choose a mortgage and term accordingly.


Herjit Driver


Comparing Variable and Fixed Rate Mortgages