Fixed vs. Variable: Which Fits Your Budget?

Fixed and variable mortgages handle rate changes differently. The right one depends on your budget and how much uncertainty you can live with.

The short answer: A variable rate isn't always cheaper. It depends on where rates go and how long you keep the mortgage. Compare both, including what it costs to get out early.

Fixed rate

Your rate stays the same for the whole term, so your payment is predictable. The catch: breaking a fixed mortgage early can be expensive, so check the penalty formula.

Variable rate

Your rate moves with the lender's prime rate. Some variable mortgages change your payment when rates move. Others keep your payment the same and change how much goes to interest vs. principal. Read the contract.

Questions to ask

Does my payment change when rates change?
If my payment stays fixed, when could I be forced to increase it?
What would a higher payment do to my budget?
How is the penalty calculated?
Can I convert to fixed, and on what terms?

Think about stress, not just math

A variable payment might work on paper but keep you up at night. If your budget is tight or your reserves are low, predictability is worth something. Pick the one you can stick with through a bad stretch.

If you might move or refinance

Variable mortgages usually have a smaller penalty to break. If you think you'll sell or consolidate debt during the term, that matters.

Related guides

Let's talk it through

Book a call and we'll go over your options with you.

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These guides are general information, not a mortgage offer or personal advice. Every approval depends on lender review of your income, credit, property and documents. Elevate Lending, powered by BRX, serves clients in Alberta and British Columbia.