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Fixed or variable rate?  

Fixed rates are often considered less risky but variable rates could cost you less. So which type of interest rate should you choose? The decision between a fixed, variable or combined rate will depend on your personal profile and what you’re looking for in terms of ensuring stability or paying off your mortgage sooner. To help you decide, here’s an overview of the different types of rates. 

Ensure stability with a fixed rate

When you opt for a fixed-rate mortgage, you’re making a commitment to pay interest calculated at that rate for the entire mortgage term, regardless of how market rates fluctuate during that time. A fixed rate is considered more secure than a variable rate because it can’t increase over time, even if benchmark rates rise.


  • Since a fixed rate doesn’t fluctuate during the set term (1 to 5 years), you’ll know the exact amount of your payments from month to month and you can keep your budget in line.
  • You’ll enjoy the peace of mind that comes from not being affected by higher interest rates.


  • Based on historical data, a fixed-rate mortgage often ends up costing the homebuyer more.
  • Although you’re protected from rising rates, you can’t take advantage of falling rates.

Consider a fixed rate if…

  • You’re a first-time homebuyer
  • You have a tight budget with little room to maneuver
  • Stability, security and a cautious approach are important to you


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Pay off your mortgage sooner with a variable rate

When you’re shopping for a mortgage solution, you’ll probably notice that variable rates are often lower than fixed rates.

On the one hand, a fixed rate allows you to determine precisely how much your payments will be. On the other hand, a variable rate lets you make the most of a favourable market, which has been the case in recent years.

On average, a variable-rate mortgage costs less over the long term. Since homeowners with a variable rate often pay less interest than they would with a fixed rate, they can pay off their mortgage faster. However, there’s no guarantee how markets will perform in the future. 


  • Better potential cost savings
  • Mortgage paid off sooner.


  • Exposure to possible interest rate increases
  • The portion of your monthly payment that goes towards the principal is not always the same
  • Your household budget could be affected if your payments go up significantly

Consider a variable rate if…

  • You can tolerate some risk
  • Your budget allows you to pay more if necessary
  • You’d like to save money over the long term

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Would you like to enjoy the benefits of both a fixed and variable rate? Look into a made-to-measure mortgage.

If you’re having trouble deciding between fixed and variable rates, you may want to consider a hybrid solution: a made-to-measure mortgage.

It’s possible to divide your mortgage loan into any number of portions and apply different parameters to each portion. For example, you could go with a fixed rate for 25% of your mortgage and a variable rate for the other 75%.

You also have the option of choosing a different term, payment frequency and amortization period for each portion. Another strategy is to use a mortgage line of credit for one of the portions.

A mortgage advisor can help you decide the best possible combination according to your needs.

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