Fixed or Variable Mortgage Rate: What’s best for you?

by | Jun 17, 2022

So you’re finally ready to take the plunge and buy your first home? Congratulations, but it can be a daunting task. Are you sure you’re getting the best deal out there? As a new homebuyer, you probably have questions about whether or not to get a fixed or variable rate mortgage. You’re not the only one! For most people, their first home is among the biggest purchases they’ll make in their lives. You must understand what these terms mean and can decide which one best fits your needs.

Without understanding the difference between fixed and variable mortgages, it can be difficult to determine which the best type of mortgage is for you. Fortunately, Yogi & Associates is here to help! Our team has years of combined experience in this industry, and we’re ready to discuss any questions you have about your mortgage options.

What Is A Fixed Rate Mortgage?

Fixed mortgages are good for those who want stability in their monthly payments and don’t want to worry about interest rates fluctuating. A fixed mortgage gives you a set interest rate for the term of your mortgage, which means it stays consistent throughout. You can choose between an open mortgage (that won’t financially ding you when you break a mortgage or pay it off early) or a closed mortgage that comes with the cost of breaking up before your term is over.

Most borrowers in Canada select fixed-rate mortgages, according to the Mortgage Professionals Canada (MPC), and it’s simple to see why. In Canada, the large majority of borrowers take out fixed-rate mortgages. Fixed-rate mortgages allow homebuyers to plan their payments, but there are drawbacks to this option.


Here’s how a fixed-rate mortgage works in practice.

On a $450,000 loan that will be paid back over 30 years, a mortgage lender offers a 2% annual percentage rate and a fixed term. Regardless of what happens with the economy, the mortgage interest rate will remain at 2%.

If you want to learn more about fixed mortgage rates, you can look into our article by clicking Fixed Rate Mortgage in Canada: A Brief Overview.

What Is A Variable Rate Mortgage?

Variable-rate mortgages are popular with homebuyers because they allow you to get a lower interest rate than fixed-rate mortgages for short periods. These rates are typically lower when the Bank of Canada‘s prime rates are at their lowest (or even negative), but if those rates rise unexpectedly, your mortgage payments will increase automatically.

Variable-rate mortgages allow borrowers to take advantage of dropping interest rates. Rising interest rates, on the other hand, can dramatically raise the cost of borrowing, so you should be aware of the potential for higher mortgage payments before choosing a variable-rate mortgage.

If you want to learn more about Variable Mortgage rates, you can see the article we wrote by clicking  Variable Mortgage Rates: Guide 2022!

Fixed or Variable Mortgage Rate: What's best for you?

Difference between Fixed Mortgage Rate and Variable Mortgage Rate:

Following are the differences between fixed mortgage rates and variable mortgage rates

Fixed Mortgage Rate Variable Mortgage Rate


A fixed-rate mortgage is a type of mortgage where the interest rate and monthly payment do not change during the term of the mortgage.


A variable-rate mortgage refers to a type of mortgage in which the interest rate can change depending on market conditions, such as prime lending rates.

Interest Rate:

Fixed-rate mortgages are known for having a higher interest rate but with certainty where you know exactly what your monthly payment will be.

Interest Rate:

Variable-rate mortgages generally have a cheaper interest rate but are at the whims of changing prime rates established by The Bank of Canada.


A fixed-rate mortgage means your interest rate and monthly payment remain the same throughout the length of your loan.


With a variable-rate mortgage, the interest rate may change over time—but you can lock in an initial interest rate until your loan is paid off.

Mortgage Break:

Fixed-rate mortgages are harder to break up with, but also have a lower monthly payment.

Mortgage Break:

Variable-rate mortgages are easier to break up with because they have lower penalty fees and generally have a lower monthly payment.

Fixed or Variable Mortgage Rate: What's best for you?

Things to Consider When Choosing a Mortgage:

It’s important to know whether a fixed or variable rate mortgage is best for you. Generally, a fixed-rate mortgage is more attractive to people who want the security of knowing what their mortgage payments will be for the next few years. On the other hand, variable-rate mortgages are ideal if you think interest rates will go down over time or you need your home as an investment option that offers some degree of protection against market volatility – plus they offer lower rates than fixed-rate mortgages in general.

The following factors will influence whether you choose a fixed or variable rate mortgage:

  • The amount of your initial deposit
  • Bank-to-bank mortgage rate comparisons
  • The principal of the loan
  • The repayment period
  • Additional funds to be added to the monthly payment — for example, title or flood insurance
  • Taxes on real estate
  • The mortgage’s duration

The Bottom Line!

It’s important to consider both fixed-rate and variable-rate mortgages when you’re choosing a mortgage. If you’re not sure which one is right for you, contact Yogi & Associates today! Our experienced Counsellors can help you make an informed decision about your options.

Yogi & Associates will provide expert advice on how to choose the best mortgage for you and your family. We’ll help you understand the process so that you find the perfect home at an affordable price. You can learn more about both types and talk with a counselor by visiting Yogi & Associates today.