FIXED VS VARIABLE RATES

Variable vs. Fixed Mortgages: What You Need to Know

Choosing between a variable and fixed-rate mortgage is one of the most common decisions buyers face. The right choice depends on market conditions and your plans.

Variable rates move with the Bank of Canada’s overnight rate, while fixed rates are tied to the bond market. When rates are low, the gap between the two is often minimal—making the decision less about price and more about risk.

Fixed rates offer stability. Your payment stays the same, which makes budgeting easier and protects you if rates rise. For many buyers, locking in a low rate provides peace of mind.

Variable rates offer more flexibility. Penalties are typically lower (around three months’ interest), which can make them a better option if you plan to sell or refinance within a few years.

The trade-off is simple:

Fixed = stability and predictability
Variable = flexibility and potential savings

If you expect to stay in your home long-term, a fixed rate can make sense. If you value flexibility or don’t plan to hold the mortgage for long, a variable rate may be the better fit.

The best move is to review your options with a mortgage professional and choose based on your timeline, risk tolerance, and financial goals.

Kristen Young

Merge Mortgage Group

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