Fixed vs variable mortgages in Canada
A fixed rate stays the same for the term. A variable rate moves with the lender's prime rate. The choice changes your payment, your risk and what it costs to get out early.
Figures checked September 24, 2026Fixed-rate mortgages
The rate and the payment are set for the whole term, most often five years. You know exactly what you'll pay, and your lender carries the risk of rates rising. The trade-off is a bigger penalty if you break the mortgage early, because lenders can charge the interest rate differential.
Variable-rate mortgages
The rate is the lender's prime rate plus or minus a set amount. With a variable-rate mortgage the payment stays the same and the share going to interest moves with prime; with an adjustable-rate mortgage the payment itself changes so the amortization stays on schedule.
Trigger rates
On a fixed-payment variable mortgage, if rates rise far enough the payment covers only the interest. That's the trigger rate. Past it, the balance can grow until the lender requires a higher payment, a lump sum or a switch to fixed.
Choosing
Variable has often cost less over time, but not always, and it asks you to live with uncertainty. Fixed suits a tight budget or a plan to stay put. If you may sell or refinance within the term, the smaller variable penalty can matter more than the rate.
More guides
General information about Canadian mortgages, not financial, legal or tax advice. Lenders and insurers apply their own criteria, and rules change; confirm the details with a licensed mortgage professional before you act.