Fixed vs Variable Mortgage Rates & 30-Year Amortizations

Fixed-Rate Mortgages

Your interest rate and your monthly payment amount are locked in stone for the entire duration of your mortgage term (e.g., 5 years).

• Pros: Complete stability, predictability, and total peace of mind. Your budget will not change regardless of what happens to the economy.
• Best for: First-time buyers, people on strict monthly household budgets, or conservative investors.

Variable-Rate Mortgages

Your underlying interest rate fluctuates automatically in lockstep with your lender's Prime Rate (which responds to the Bank of Canada's overnight policy rate). There are two structural formats for variable products:

• Variable with Fixed Payments: Your monthly cash output remains uniform. However, if prime rates go up, less of your payment goes toward your principal equity and more goes toward interest costs. If rates drop, more goes toward your principal.
• Variable with Adjustable Payments: Your monthly cash out-of-pocket amount changes immediately whenever the prime rate fluctuates. If rates are cut, your payment drops; if rates climb, your payment goes up.
• Best for: Buyers with highly flexible income streams and a solid tolerance for market risk.

30-Year Amortizations

Amortization is the total lifespan it takes to pay off a mortgage entirely. Traditionally, if you put down less than 20%, you are restricted to a 25-year maximum window. However, expanding your timeline to a 30-year amortization lowers your mandatory monthly payments, opening up vital cash flow for other life needs (investing, childcare, home renovations). Eligible first-time buyers and buyers of brand-new builder homes have options to access a 30-year horizon — contact us to review your specific situation.