FIXED VS VARIABLE MORTGAGE RATES — WHAT’S THE DIFFERENCE?
- johnathanmcquoid
- Jan 17
- 2 min read
Choosing between a fixed or variable rate is one of the biggest decisions you’ll make when getting a mortgage.
Here’s what you need to know 👇
🔒 FIXED RATES
Fixed rates give you stability and predictable payments.
With a fixed rate:
✔️ your payment stays the same
✔️ your interest rate never changes
✔️ budgeting is easy
Fixed terms are available in:
• 1-year
• 2-year
• 3-year
• 5-year
• 7-year
• 10-year
The downside to fixed rates?
Penalties.
If you break your fixed-rate mortgage early, lenders charge the higher of:
✔️ 3 months’ interest
OR
✔️ IRD (Interest Rate Differential)
Fixed-rate penalties can be anywhere from $1,000 to $20,000+, depending on the lender and how much time is left in your term.
Fixed rates are great if you want stability and don’t plan to break your mortgage early.
🔁 VARIABLE RATES
Variable rates move based on the lender’s prime rate.
Your rate is expressed as:
Prime ± a discount/premium
If prime increases → your rate goes up
If prime decreases → your rate goes down
The biggest advantage?
Lower penalties.
Variable-rate mortgages usually only charge:
✔️ 3 months’ interest
This is often thousands of dollars less compared to fixed-rate penalties.
Variable rates are great if you want flexibility and the option to refinance or switch lenders easily.
🤔 WHICH ONE SHOULD YOU CHOOSE?
Choose Fixed if you want:
✔️ stability
✔️ predictable payments
Choose Variable if you want:
✔️ flexibility
✔️ lower penalties
✔️ potential savings if rates drop
💬 Final Thought
Both options have pros and cons — the right choice depends on your goals, your risk tolerance, and your plans for the property.
If you want help comparing fixed vs variable for your situation, send The Frontline Mortgage Group a message.
We’ll walk you through your options and help you make the best decision. 💬