What are the pros and cons between fixed and variable rate mortgages in Canada?

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Fixed and variable rate mortgages

Both have their advantages and disadvantages in Canada.

Here are some pros and cons of each:

Fixed Rate Mortgages


  • Stable payments: With a fixed rate mortgage, your payments remain the same throughout the term of the mortgage. This can make budgeting and financial planning easier since you know exactly how much your monthly mortgage payment will be.
  • Protection against interest rate increases: If interest rates rise, your mortgage rate and payment won’t be affected, which can provide peace of mind and protection against unexpected costs.

Fixed Rate Mortgage


  • Higher initial interest rate: Fixed rate mortgages often have a higher interest rate than variable rate mortgages.  Currently in Canada (spring 2023), the variable rate is higher than the fixed rate.
  • Penalty for early repayment: Breaking a fixed rate mortgage early can result in significant penalties, which can limit your options if you need to refinance or sell your home.  This is a massive consideration as 65% of Canadian fixed mortgage borrowers pay a penalty.  The penalties can be stiff; ask Huber Mortgage if you can opt to borrow from a fair penalty mortgage company lender.

Variable Rate Mortgages


  • Lower initial interest rate: Variable rate mortgages often start with a lower interest rate than fixed rate mortgages.
  • Potential for lower overall interest costs: If interest rates decrease, so does your mortgage rate and payment, which can lead to lower overall interest costs over the life of the mortgage.
  • More flexibility: Variable rate mortgages typically have lower penalties for early repayment, which can give you more flexibility if you need to refinance or sell your home.

Variable Rate Mortgage


  • Less predictable payments: Your mortgage payments may fluctuate with changes in interest rates, which can make budgeting and financial planning more challenging.
  • Exposure to interest rate increases: If interest rates rise, so does your mortgage rate and payment, which can lead to higher costs and financial stress.
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Conclusions and Further Thoughts

Overall, the decision between a fixed and variable rate mortgage in Canada depends on your personal financial situation and tolerance for risk.

A mortgage professional can help you evaluate your options and make an informed decision.  Call Huber Mortgage!



PS – One of my hobbies is blogging about mortgages, debt and government policy.  During the day I’m a MORTGAGE BROKER in Kelowna, BC!

Check out the Huber Mortgage Home Buyers Guide HERE

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