Do you know the difference between a fixed and variable mortgage rate? If not, we can help! Read on to learn the basic differences between these two kinds of home loans. Find out how changes in interest rates can affect your payments, plus gain some quick insights that can help you decide which mortgage rate is best for you.

Fixed rate

A fixed-rate mortgage means your interest rate stays the same for the entire time you’re paying back your loan. It’s like having a set price tag on your mortgage that doesn’t change, providing you with steady and predictable monthly payments.


Payment stability

Having consistent and predictable monthly payments helps you plan your budget easily without worrying about changes in your payments

Financial planning

Fixed mortgages ensure you know exactly how much you’ll pay off over the loan term. This helps you manage your money and makes it easier to reach your financial goals

No surprise increases

If interest rates go up, a fixed-rate mortgage keeps your payments stable, meaning you won’t have to worry about suddenly having to pay more

Things to know

Payment breakdown: When you make a mortgage payment, some money will go towards the actual loan amount you borrowed (the principal) and the remainder covers the interest charged on the loan. At the start of your mortgage, more of your money goes toward paying off interest. Over time, as your principal goes down, more of your payments will go toward paying down the overall mortgage. It’s like slowly building ownership in your home.

Prepayment penalties: If you choose a closed fixed-rate mortgage, there may be penalties if you want to pay off your loan early or want to make certain changes to it. Before making any changes in your payment plans, be sure to understand your mortgage contract and speak with a financial advisor to learn more.

Variable rate

With a variable rate mortgage, your monthly mortgage payment will be the same but the portions that goes towards interest and the principal can change. If interest rates go up, more of your payment will cover interest. If the interest rate drops, a larger portion of your payment will go towards the principal of your loan. Because of this, how long it will take to pay back your loan is unpredictable.


Flexibility in payments

Your payments change based on interest rate fluctuations. During periods of lower interest rates, you may see more of your payment going towards your principal, helping you pay down your loan faster.

Potential cost savings

If interest rates stay low or decrease, you could pay less interest over time with a variable-rate mortgage. This can be helpful, especially when compared to fixed-rate mortgages that maintain the same interest rate throughout the term, potentially resulting in higher overall interest costs.

Things to know

Potential payment increases: Be aware that with a variable-rate mortgage, your payments could go up if interest rates increase. This means if the interest you pay becomes more than what your payment covers, your monthly payment may go up.

 Market sensitivity: Variable rates are tied to market conditions. If interest rates are predicted to rise, it might be a sign that your payments could go up too. Keep an eye on economic trends to predict potential adjustments in your mortgage payments.

Which one is best for you?

A fixed-rate mortgage is best for you if:

  • You like the idea of having the same monthly payments

  • You want to know how much you’ll pay off by the end of your mortgage term

  • You believe interest rates may rise and want to ensure your payments stay constant

A variable-rate mortgage is best for you if:

  • You are comfortable with the idea that your total interest costs may change

  • You are willing to take on some risk in exchange for the possibility of paying less interest over the life of your mortgage

  • Your budget can handle some fluctuations in your monthly payment amounts

Meet our Mobile Mortgage Specialists

As a first-time homebuyer, we understand the importance of flexibility. Our Mobile Mortgage Specialists bring the branch to you, accommodating your schedule and providing personalized service, ensuring you can easily navigate the journey to your first home without any unnecessary stress.

Find out how much you can afford

Mortgage affordability calculator →

See how much you can borrow to buy a home based on your income, debt, and living expenses.

Mortgage payment calculator →

Calculator your payment or mortgage amount and see how extra payments can reduce your interest.

Budget calculator →

Insert your monthly income, expenses and savings and get a clear picture of where you are financially.

Have questions? That’s what we’re here for!

A female employee wearing a grey blazer is talking on her phone and looking at a laptop.

Give us a call

Have questions about which mortgage option is most suitable for you?

A male employee with a beard in engaged in conversation.

Connect with us

Want to learn more about mortgages? Book an appointment with one of our advisors.