Fixed vs Variable Mortgage Ontario: Which Fits Your Situation?

It depends on your situation, not on one answer for everyone. Fixed gives you a payment you can plan around for the whole term. Variable can start lower, but your rate moves with prime, so you need room in your budget for changes. Right now fixed rates are not as attractive as usual, so variable deserves a close look, but fixed still makes sense if you need payment certainty. Your plans matter too: if you might sell, refinance or move your mortgage before the term ends, the penalty difference is worth weighing. We compare both on your numbers. For market commentary, see our fixed vs variable rates guide.

Choosing the wrong type can cost you in two ways: paying more interest than you needed to, or facing a payment or penalty you did not plan for. The size depends on your balance, your term and what rates do, so we model both options with your numbers before you decide, including a higher-rate scenario for variable.

The break-even is the point where the variable mortgage costs the same as the fixed over your term. If rates stay below that point, variable comes out ahead. If they rise above it, fixed does. We calculate it for your mortgage, balance and term, and show how your payment and total cost change in a few scenarios.

A prime tracker is a variable-rate mortgage priced as your lender's prime rate plus or minus a set amount. When the lender's prime rate changes, your rate changes by the same amount. Lenders' prime rates generally follow the Bank of Canada's policy rate.

Often, yes. Many lenders let you convert a variable mortgage to a fixed rate during the term, usually without a penalty. The fixed rate you get is the one that lender offers at that time, which may be higher than what you could find elsewhere. Terms vary by lender, so check your contract.

It depends on the type of variable mortgage you have. With an adjustable-rate mortgage, your payment goes up when prime rises. With a fixed-payment variable mortgage, your payment stays the same, but more of it goes to interest, and if rates rise far enough you may reach a trigger point where the lender asks for a higher payment or a lump sum. We explain which structure each lender offers before you choose.

A rate hold secures a rate while you shop for a home or wait for a renewal, for up to 120 days with many lenders. We arrange it as part of your pre-approval, and some lenders will also re-price if rates fall before closing. A rate hold is not a commitment to lend. Any fee that applies to your file is disclosed in writing before you commit.

For a fixed mortgage, the penalty is usually the higher of three months' interest or the interest rate differential (IRD). For a variable mortgage, it is usually three months' interest. The IRD can be much larger than three months' interest, and each lender calculates it differently, so check your contract. Use our renewal and switch calculator to estimate your break cost.