Fixed vs. Variable Rate Mortgages: Which One Is Right for You?
Fixed vs. Variable Rate Mortgages: Which One Is Right for You?
Weighing your options in 2025’s mortgage market
When it comes to choosing a mortgage in Canada, one of the most important decisions you'll make is whether to go with a fixed or variable interest rate. Each has its own advantages depending on your financial goals, risk tolerance, and market conditions. Here’s a breakdown to help you make the right choice in 2025.
What Is a Fixed-Rate Mortgage?
A fixed-rate mortgage locks in your interest rate for the entire term — usually 1 to 5 years. Your monthly payments stay the same, giving you stability and predictability.
Ideal for you if:
You want consistent payments
You’re on a tight budget or fixed income
You believe rates will rise during your term
Key Benefit: Peace of mind — your payment won’t change, even if interest rates go up.
What Is a Variable-Rate Mortgage?
With a variable-rate mortgage, your interest rate fluctuates with the lender’s prime rate. Your payment or interest portion may change as rates move, depending on the lender’s structure.
Ideal for you if:
You’re comfortable with some risk
You believe rates may drop or stay stable
You want the potential to pay less over time
Key Benefit: Historically, variable rates have often been lower than fixed rates, leading to long-term savings.
How to Choose in 2025
Interest rate trends, inflation, and the Bank of Canada’s policies all influence which option might be better at a given time. As of 2025:
Rates are starting to stabilize, but uncertainty remains
Fixed rates offer predictability in a shifting economy
Variable rates may still offer lower initial costs — but come with risk
Hybrid Option: The Best of Both Worlds?
Some lenders offer split mortgages, combining fixed and variable portions. This lets you benefit from variable rates while protecting part of your loan from increases.
What’s Right for You?
Ask yourself:
Can I handle potential rate hikes?
Am I planning to sell or refinance soon?
Is locking in peace of mind more valuable than potential savings?
A mortgage broker can analyze your finances, goals, and risk tolerance to help you make the most informed decision.
Let’s Find the Right Fit
There’s no one-size-fits-all answer. The best mortgage for you is the one that aligns with your financial goals and lifestyle. Let’s chat — I’ll help you compare rates, lenders, and strategies so you feel confident in your choice.
Contact me today to get started on your fixed vs. variable mortgage decision in 2025.