Active Mortgage · Guide
Fixed vs variable mortgage rates
Choosing between a fixed and a variable rate is one of the biggest decisions in any mortgage. Neither is always cheaper. The right choice depends on your budget, your plans and how comfortable you are with change.
How a fixed rate works
A fixed rate stays the same for your whole term, so your payment is predictable. That certainty makes budgeting easier. The trade-off is that fixed rates can carry larger penalties if you break the mortgage early, often calculated using an interest rate differential.
How a variable rate works
A variable rate moves with your lender's prime rate. Some variable mortgages change your payment when prime changes; others keep the payment steady and adjust how much goes to interest. Penalties to break a variable mortgage are commonly three months' interest, which is often lower than a fixed-rate penalty.
Questions to ask yourself
Could your budget handle a higher payment if rates rose? Do you expect to sell, move or refinance before the term ends? Would a changing payment keep you up at night? If certainty matters most, fixed may suit you. If you value flexibility and can handle some movement, variable may be worth considering.
Other options
Some lenders offer hybrid mortgages that split your balance between fixed and variable portions. Term length matters too: shorter terms mean you revisit your rate sooner. Our brokers can compare real options from multiple lenders and model payments under different scenarios.
Thinking about your whole term
It can help to picture the next few years rather than just the next few months. Are you expecting a growing family, a job change or a move to a different city? Life changes often lead to breaking or porting a mortgage, and penalties and portability rules differ between fixed and variable products.
Prepayment privileges matter too. Many mortgages let you pay down a portion each year or increase your payment without penalty. If you plan to pay your mortgage off faster, compare these features alongside the rate.
How our brokers help
We can show you the payment on a fixed and a variable option side by side, explain how each lender handles rate changes and penalties, and help you test your budget at a higher rate. The goal is a choice you're comfortable with, whatever rates do.
How our brokers can help
Active Mortgage is a team of brokers working with a range of lenders. We can review your situation, explain the options that apply to you and compare real offers side by side. There's no cost to talk with us, and you're never under pressure to proceed.
Common questions
Is variable always cheaper over time?
No. It depends on how rates move during your term, which no one can predict with certainty.
Can I switch from variable to fixed?
Many lenders allow you to lock into a fixed rate during the term. Ask about the conditions.
Which has lower penalties?
Variable-rate penalties are often three months' interest; fixed-rate penalties can be higher. Check your mortgage terms.
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