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Fixed vs variable mortgage: which is better?

Updated: February 28, 2026CanadaFAQPrivate lending

Quick Summary

Neither is universally better. Fixed offers payment certainty, while variable can be cheaper but exposes you to rate changes.

The right choice depends on your risk tolerance and timeline.

Fixed-rate mortgages (typical pros/cons)

  • Pros: predictable payments and budgeting.
  • Cons: breaking early can trigger higher penalties; you may miss rate drops.

Variable-rate mortgages (typical pros/cons)

  • Pros: often lower rates at the start; penalties can be simpler in many cases.
  • Cons: payments or Amortization can change as rates move; budgeting is harder.

A practical way to decide

  • If you might sell or refinance within a short period, pay close attention to break penalties.
  • If payment stability is critical, fixed may reduce stress.
  • If you have strong cash-flow buffer, variable can be reasonable if you accept volatility.

Ask your broker to compare the options using a realistic scenario: what happens if you break in 1–3 years and what happens if rates rise.