If you’re getting ready to buy a home in Ontario, you’ve probably heard people debating mortgages. Some swear by the stability of a fixed rate. Others love the potential savings of a variable rate. So which is actually better?
The truth is that both mortgage types have advantages, and the right choice depends on your goals, budget, and comfort level with market changes. This guide breaks down the difference in simple terms so you can feel confident choosing what works best for you.
What Is a Fixed Rate Mortgage?
A fixed-rate mortgage is exactly what it sounds like. Your interest rate stays the same for the entire term. Your payments don’t change, your budget stays predictable, and there are no surprises from month to month.
Best for:
- Buyers who want stability
- First time buyers on a set budget
- Anyone expecting interest rates to rise
- Buyers who prefer predictable long term planning
Fixed rates typically come with higher penalties if you break the mortgage early, so make sure you’re comfortable with the term length.
What Is a Variable Rate Mortgage?
With a variable-rate mortgage, your interest rate can move up or down depending on the Bank of Canada’s decisions. When rates drop, your cost of borrowing may go down. When rates climb, you may pay more.
Best for:
- Buyers who are comfortable with short-term fluctuations
- Those expecting interest rates to decrease
- Flexible purchasers who can handle payment changes
Some variable mortgages keep your payment amount the same but change how much goes toward interest versus principal. Others allow the payment itself to change. Always double-check which version your lender is offering.
Fixed vs Variable Mortgage: Which One Saves You More?
This is the question most buyers care about, and the answer depends on the market.
There are seasons where variable rates outperform fixed rates and other periods where fixed rates offer better protection. Recently, buyers have noticed that variable rates are higher than fixed. This is because lenders are pricing in future expectations that rates may fall. When rate cuts are expected, fixed rates often drop before variables do.
If the Bank of Canada lowers rates significantly during your term, a variable mortgage can save you money. If rates stay elevated or climb further, a fixed mortgage is usually the safer choice.
On the hunt for more home buying advice? You may find these related blog posts helpful!
Should I Go Variable or Fixed? Key Questions to Ask
Before choosing your mortgage type, consider how you answer these questions:
1. How important is payment stability?
If a surprise payment increase would cause stress, fixed is likely the better match.
2. Do you believe rates will drop soon?
If yes, a variable rate may give you more long-term savings.
3. Are you planning to sell or refinance before your term ends?
Variable mortgages usually have lower penalties, which can save thousands.
When Fixed Rates Make the Most Sense
Choose fixed if you want:
- Predictable payments
- More control over your long-term budget
- Peace of mind in a rising rate environment
- A steady, low-stress approach to homeownership
Fixed is especially popular with first-time buyers who are still adjusting to owning a home.
When Variable Rates Make the Most Sense
Choose a variable if you want:
- The potential to save when rates fall
- Lower penalties for breaking your mortgage
- Flexibility to refinance or sell during your term
- A structure that adapts to future market changes
Variable rates often appeal to buyers who want the option to pivot as the market moves.
Thinking about purchasing a home in Toronto or the GTA? These helpful guides walk you through what to expect and how to prepare:
Need Help Figuring Out the Best Mortgage Strategy?
Choosing between fixed and variable can feel overwhelming, especially in a shifting market. The Ambler Real Estate Team works closely with trusted lenders and mortgage professionals who can help you compare options, understand risks, and choose a strategy that supports your long-term goals.
If you’re planning to buy soon or want professional guidance before you start your search, reach out anytime. We’re here to make the process easier, clearer, and tailored to you.
Buying a house in Toronto? We can help! Call (416-884-8027) or email (team@amblerhomes.com).
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