TIME TO LOCK IN YOUR VARIABLE RATE MORTGAGE?
- johnathanmcquoid
- Jan 17
- 2 min read
About 1 in 3 Canadians currently have a variable-rate mortgage — a strategy that has worked well during years of steadily declining rates.
But with recent rate increases, many borrowers are wondering whether they should lock in. Here’s what you need to know 👇
❌ Don’t make the decision without expert advice
Your first call should be to an independent mortgage expert, not your lender.
Why? Because:
✔️ lenders focus on their own products
✔️ they won’t explain all alternatives
✔️ they won’t highlight long-term risks
Your broker evaluates ALL lenders — not just one.
❌ Don’t panic over headlines
For years, the media has warned of:
✔️ housing crashes
✔️ explosive rate hikes
✔️ economic doomsday
In reality? Most predictions never materialized — except in a few isolated markets for short periods.
Stay informed, but stay level-headed.
❌ Don’t lock in without reviewing penalties
This is where borrowers get blindsided.
Variable-rate mortgages typically charge:
✔️ 3 months’ interest to break
But fixed-rate mortgages often charge:
🚫 the greater of 3 months’ interest OR the Interest Rate Differential (IRD)
And IRD penalties can be MASSIVE — sometimes up to 900% higher than variable penalties.
Always compare before locking in.
❌ Don’t assume all lenders calculate penalties the same
Penalty formulas vary dramatically between lenders.
Also watch out for:
✔️ “cash back” mortgages (clawbacks apply)
✔️ no-frills mortgages with limited flexibility
✔️ fixed-payment variable mortgages (payments may jump when locking in)
The fine print matters — a lot.
❌ Don’t forget your future plans
Locking in may (or may not) make sense depending on:
✔️ upcoming moves
✔️ refinancing needs
✔️ debt consolidation plans
✔️ income changes
✔️ renovations or major expenses
There is not one right answer — only the right answer for you.
💬 Final Thought
Life is variable — your mortgage can be too.
Before you lock in, refinance, or break your mortgage, make sure you've reviewed all the implications, penalties, and long-term costs. If you want a personalized analysis, reach out to The Frontline Mortgage Group anytime. 💬