Payment Comfort
Your mortgage should remain manageable when rates or other household expenses change.
Explore the Guide
Compare your mortgage options
Start with fixed and variable rates, then explore payment structures, mortgage flexibility and the features that can affect your long-term cost.
Quick Answer
The best mortgage type is the one that fits your plans—not simply the one with the lowest rate today.
A mortgage rate matters, but so do payment stability, penalties, prepayment privileges, portability and what may happen if your plans change before the term ends.
Why This Matters
Two mortgages with similar rates can behave very differently.
The mortgage structure you select determines how your payment may respond to rate changes, how much flexibility you have and what it could cost to make changes before the end of your term.
Future Plans
Selling, moving or refinancing during the term may affect which mortgage structure makes sense.
Overall Cost
Rate, penalties, privileges and flexibility all contribute to the real cost of a mortgage.
Fixed vs. Variable
Start with how much rate movement you are comfortable accepting.
Fixed and variable mortgages distribute risk differently. Neither option is universally better—the decision should reflect your financial comfort and your plans.
Fixed Rate
A predictable interest rate and payment
With a fixed-rate mortgage, your interest rate is set for the length of your mortgage term. Your regular principal-and-interest payment generally remains the same throughout that term.
May suit you when:
People who value predictable payments and want protection from rate increases during the term.
Important consideration:
Fixed mortgages can have larger prepayment penalties, particularly when an interest rate differential calculation applies.
Variable Rate
A rate that changes with the lender’s prime rate
A variable mortgage rate is usually expressed as a discount or premium to the lender’s prime rate. When prime changes, the interest charged on your mortgage changes as well.
May suit you when:
People who are comfortable with rate movement and understand how their payment structure responds when prime changes.
Important consideration:
The payment may change immediately, or the payment may remain fixed while the amount going toward principal changes. It depends on the mortgage.
Fixed and variable at a glance
FeatureFixedVariable
Interest rate
Set for the mortgage term
Moves when the lender’s prime rate changes
Payment predictability
Usually highly predictable
Depends on the payment structure
Protection from increases
Rate is protected during the term
Interest cost may rise when prime rises
Benefit from decreases
Rate generally does not fall during the term
Interest cost may fall when prime falls
Potential penalty
May include an interest rate differential
Often based on approximately three months’ interest
Variable Payment Structures
Not every variable mortgage responds to rate changes the same way.
Understanding the payment structure is just as important as knowing that the rate is variable.
Adjustable Payment
The payment changes when prime changes.
When the lender’s prime rate rises or falls, the regular payment is recalculated. This keeps the mortgage on its intended amortization schedule, but monthly costs may fluctuate.
This structure makes the effect of rate changes visible immediately in your household budget.
Fixed Payment Variable
The payment may remain the same while its composition changes.
When rates increase, more of the payment goes toward interest and less goes toward principal. When rates decrease, more may go toward principal.
If rates rise far enough, the mortgage may reach a trigger rate or trigger point and require action.
“Variable rate” does not tell you the whole story.
Before choosing a variable mortgage, confirm whether the payment changes with prime, how the lender handles trigger points and whether conversion to a fixed mortgage is permitted.
Open vs. Closed
How much repayment flexibility do you need?
Open and closed describe the restrictions around repaying your mortgage—not whether your interest rate is fixed or variable.
Open Mortgage
An open mortgage generally allows you to repay the balance in full without a standard prepayment penalty.
Greater repayment flexibility
May work for a short-term financing need
Often carries a higher interest rate
Closed Mortgage
A closed mortgage usually provides a lower rate but places limits on how much can be repaid before the term ends.
Usually includes annual prepayment privileges
A penalty may apply when the mortgage is broken early
Terms and restrictions differ by lender
Choosing a Mortgage Term
Your term should connect with your real-life timeline.
The term is the period covered by your mortgage agreement. At the end of the term, the remaining balance generally needs to be renewed, refinanced or repaid.
Questions to consider
Could you sell or move before the term ends?
Are major income or family changes expected?
How important is payment predictability?
Might you refinance or access equity?
Are you comfortable renewing sooner if you choose a shorter term?
Penalties and Prepayment Privileges
Flexibility matters when life changes before your mortgage term ends.
Mortgage penalties and repayment privileges can differ significantly between lenders, even when the advertised rates look similar.
Breaking the Mortgage
A penalty may apply when you refinance, sell or transfer the mortgage before the term ends.
Penalty Calculation
The calculation may be based on three months’ interest or an interest rate differential, depending on the mortgage.
Portability
A portable mortgage may allow you to move the mortgage to another property, subject to lender approval and conditions.
Payment Increases
Some mortgages allow you to increase regular payments by a specified amount.
Annual Lump Sums
Many closed mortgages permit a percentage of the original balance to be prepaid each year.
Double-Up Payments
Certain lenders offer additional payment options that can help reduce the balance sooner.
More Than the Rate
The lowest rate is not always the lowest-cost mortgage.
A small rate difference can be overshadowed by a large penalty or by restrictions that prevent the mortgage from adapting when your plans change.
Compare the full mortgage
The interest rate and term
Fixed, variable or adjustable payment structure
Prepayment penalty calculation
Annual lump-sum and payment-increase privileges
Portability and transfer options
Restrictions, fees and lender policies
Continue Your Learning
Explore how your mortgage choice connects with your next step.
Mortgage Solutions
Explore Your Mortgage Options
Start with the broader mortgage solutions available for buying, renewing and refinancing.
Explore GuideLearning Centre
Renewing Your Mortgage
Learn how to review your rate, lender and mortgage structure before signing a renewal.
Explore GuideLearning Centre
Refinancing Your Mortgage
Understand when changing your mortgage before renewal may support your financial plans.
Explore GuideCommon Questions
Mortgage type questions, answered.
Is a fixed mortgage safer than a variable mortgage?+
A fixed mortgage provides greater rate and payment certainty, but that does not automatically make it the right choice for everyone. The better option depends on your budget, risk comfort, timeline and need for flexibility.
Does a variable mortgage payment always change?+
No. Some variable mortgages have adjustable payments that change when prime changes. Others have fixed payments, where the portion applied to interest and principal changes instead.
What is a trigger rate?+
On certain fixed-payment variable mortgages, the trigger rate is the point where the regular payment may no longer cover all of the interest being charged. The lender may then require changes to the payment or mortgage.
Is an open mortgage better because it is more flexible?+
An open mortgage offers greater repayment flexibility, but it often comes with a higher interest rate. It may be useful when you expect to repay the mortgage soon, but it is not automatically the best everyday option.
Should I always choose the lowest mortgage rate?+
Not necessarily. A very low rate can come with restrictive penalties, limited prepayment options or less portability. The mortgage should be compared as a complete product.
What mortgage term should I choose?+
Your term should reflect your plans, comfort with rate changes and likelihood of selling, refinancing or making major changes before the term ends.
Can I switch from variable to fixed during my term?+
Many lenders allow a variable mortgage to be converted to a fixed rate, but the available rate and new term conditions will depend on the lender’s policy at that time.
A Note from Kiersten
Not sure whether fixed or variable makes more sense?
The right choice depends on more than where rates might go next. I can help you compare the payment structure, penalties, flexibility and overall fit so you understand exactly what you are choosing.