If you’re starting your mortgage journey, one of the first questions you’ll face is:
“Should I go with a fixed rate or a variable rate?”
It’s not just a technical choice — it can impact how much you pay each month and how much interest you pay over the life of your mortgage.
Here’s a simple breakdown to help you figure out which one might fit your situation in 2025.
Fixed-Rate Mortgages (Stability First)
A fixed-rate mortgage means your rate doesn’t change for the entire term of your mortgage (usually 1–5 years).
Why people choose fixed:
- Set-it-and-forget-it: Your payment amount stays the same every month.
- Predictability: It’s easier to plan your budget.
Trade-offs:
- Rates are often higher than variable to start.
- Breaking your mortgage early can come with significant penalties.
Variable-Rate Mortgages (Flexibility & Potential Savings)
With a variable-rate mortgage, your interest rate moves with your lender’s prime rate — meaning it can go up or down during your term.
Why people choose variable:
- Lower starting rates: Historically, these can cost less over time.
- Potential savings: If rates drop, you pay less interest.
Trade-offs:
- Less certainty: Your payment could increase if rates rise.
- Not ideal if rate changes would strain your budget.
Which One Makes Sense in 2025?
Rates have been a moving target, and a lot of Canadians are wondering if they should lock in for security or stay flexible in hopes of saving.
Here’s how to think about it:
- Your comfort level: How much risk are you okay with?
- Your timeline: Are you planning to stay in this home long-term or might you sell or refinance soon?
- Market outlook: Economists expect some changes in rates over the next couple of years — but no one can predict with certainty.
This is where working with a broker really helps — we can crunch the numbers for both options and find the right fit for your goals. There’s no universal “best” choice. It’s about finding the mortgage that works for you.
Need help figuring it out?
If you’re on the fence between fixed and variable, let’s talk. I’ll walk you through the pros and cons for your situation and help you make a confident decision.