Fixed or variable: choosing a mortgage that fits your comfort level

The useful question is not which rate will win in hindsight. It is which mortgage you can live with if rates, income or your plans change. Compare payment behaviour, flexibility and exit costs as well as the starting rate.

Fixed-rate mortgages

A fixed rate stays the same for the agreed term. Scheduled principal-and-interest payments are usually predictable, although tax collections or other payment components can change. The term is not the same as the amortization: a five-year term does not mean the mortgage is paid off in five years.

Two kinds of variable-rate payment

With an adjustable-payment mortgage, the payment generally changes when the applicable rate changes. With a fixed-payment variable mortgage, the payment may initially stay level while the split between principal and interest changes. If interest rises far enough, trigger-rate or trigger-point provisions may require increased payments, a lump sum or other action. Exact rules are in the contract.

Ask whether the payment changes, when it changes and how you will be notified.
Ask what happens if the payment no longer covers interest.
Request a payment example at higher rates, not just today’s rate.

Prime rate is not the Bank of Canada rate

Variable mortgages often use a lender’s prime rate plus or minus a stated adjustment. The Bank of Canada’s policy rate influences the market, but it is not itself your lender’s prime rate. Lenders set their own prime and contract rules. A variable rate is not guaranteed to start lower or remain cheaper than a fixed rate.

Breaking the mortgage early

For many closed fixed mortgages, the charge is the greater of three months’ interest and an interest rate differential. Many closed variable mortgages use three months’ interest. These are common structures, not universal quotes: calculation methods, restricted products and other fees can make a significant difference. Ask for the lender’s written terms and a realistic payout example.

Make the choice around your life

If a move, refinance or family change is possible, ask about portability, prepayments, restrictions and converting to fixed. Conversion may involve the lender’s available rate and a new term; it is not a promise of the best market rate. No one can guarantee where rates will go.

How much payment uncertainty can your budget absorb?
Would predictable payments help you sleep better?
How likely are you to sell or refinance before the term ends?
Do you have an emergency buffer for higher payments or unexpected costs?

Let’s make this personal

Tell Matt what matters most to you, and what feels unclear. We can help you work through the mortgage side of the decision and coordinate the next steps with your other professionals. Email matt.parker@indimortgage.ca or call 778.897.2554.

General Canadian mortgage guidance with British Columbia context; reviewed October 16, 2026. Your lender’s written requirements, mortgage contract and professional legal or tax advice take priority.