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The Great Mortgage Debate - Fixed Vs Variable.

Wednesday, February 24, 2021   /   by Mario Daniel Sconza

The Great Mortgage Debate - Fixed Vs Variable.

Fixed Mortgage: Your mortgage payments will stay the same for the duration of the term.
Variable Mortgage: Payments change with the prime lending rate set by your lender.

Which is better?

Fixed Mortgage Pros and Cons


  • Lock in payments for a specific time. You don’t need to worry about potential rate increases.
  • Take advantage of historically low rates.



  • Expensive to break your mortgage. 60% of Canadians do.
  • Historically, the rates are higher than variable mortgages.
  • Expensive mortgage penalties. On a $500,000 mortgage the penalty is $22,500*.


Variable Pros and Cons:


  • Over the past 25 years, variable rates have been cheaper.
  • Typically charge a 3-month mortgage penalty for breaking the mortgage. On a $500,000 mortgage, the penalty is about $5,625*.



  • Your payment can go up based on the prime rate.
  • The monthly payment could fluctuate year over year.

?? Historical Returns

Variable rates have been historically lower than fixed rates.*

Blue Line: fixed

Orange Line: Variable

?? Interesting Stats:**

·        3 million homeowners have a mortgage, out of a total 9.8 million homeowners in Canada.

·        6 million Canadians have a Home Equity Line of Credit (HELOC).

·        68% of mortgages in Canada have fixed interest rates.

·        27% of mortgages have variable or adjustable rates.

·        The average amortization period is 22.2 years.

·        The average mortgage interest rate in Canada is 3.09%, up from 2.96% in 2017.