Fixed or variable? How to actually make the call

Every client buying or renewing eventually asks me the same question: fixed or variable? And they usually expect me to answer with a prediction about where rates are going.

Here's my honest answer: nobody knows where rates are going. Not me, not your bank, not the economist on the news. The good news is that you don't need a crystal ball to make this decision well. You need to understand what each option really gives you, and you need to know yourself.

What a fixed rate really buys you

A fixed rate locks your interest rate and your payment for the whole term. What you're buying is certainty. Your payment on the day you sign is your payment on the day the term ends, no matter what the world does in between. The price of that certainty is usually a slightly higher rate than variable at the start, and bigger penalties if you ever need to break the mortgage early, which more people end up doing than expect to.

What a variable rate really buys you

A variable rate moves with your lender's prime rate, which follows the Bank of Canada. What you're buying is flexibility and, historically, a discount, since variable rates have outperformed fixed over many long stretches. The price is uncertainty: if rates climb, more of your payment goes to interest, and with some products your payment itself rises. Variable mortgages also typically carry much smaller penalties, usually three months of interest, which matters if your life might change mid term.

The question that actually decides it

Forget predicting the market and ask this instead: if rates rose a full percentage point next year, would it strain your budget or just annoy you? If it would strain your budget, or cost you sleep, the certainty of a fixed rate is worth real money to you. If you have room to absorb the swings and you value flexibility, variable deserves a serious look. There's also a middle path: splitting your mortgage into a fixed portion and a variable portion, or choosing a shorter fixed term so you can reassess sooner.

And remember the stress test has your back

Whichever you choose, you'll qualify at the higher of your contract rate plus 2% or the 5.25% floor. It can feel like a hurdle, but it means you've already proven you can handle a meaningfully higher payment than the one you'll actually start with.

Let's make it personal

Fixed or variable isn't a trivia question with one right answer. It's a fit question, and the answer depends on your budget, your plans, and your nerves. That's a conversation, not a quiz. Bring me your situation and we'll figure out which side of the fence is yours.

Wrestling with this exact question? Call 250 328 4245 or send me a note. The conversation costs nothing.