Understanding Fixed and Variable Mortgage Options

There are a lot of difficult decisions that go into choosing the right mortgage, and choosing between a fixed and variable mortgage is often one of the toughest decisions to make. Experts may argue about the benefits and drawbacks of these types of mortgage, but there isn’t one universal choice that is right for everyone. What works best for you will depend on your unique financial situation. What works for you today may not be the best choice when it comes time for a renewal.
If you are wondering whether you should choose a fixed- or variable-rate mortgage, speak to a mortgage specialist, such as a mortgage broker, to discuss your situation and receive professional, impartial advice. A mortgage broker can answer all of your mortgage questions and address any concerns you have with the mortgage process. In addition to explaining the benefits of both fixed- and variable-rate mortgages, the broker can provide excellent advice on other important mortgage characteristics, such as prepayment privileges and the ability to increase mortgage payments during the term.
Professional mortgage brokers have access to the lowest fixed and variable rates on the market at any given time. The top brokers may have up to 50 different lenders competing for your mortgage, which can result in lower, unadvertised rates being obtained in some cases. Whether it is your first home or a mortgage for your new vacation house, lower mortgage rates and payments keeps more money in your pocket.

Fixed-Rate Mortgages

Fixed-rate mortgages provide a locked-in mortgage rate for the term of the mortgage. This type of mortgage is an excellent choice for people who want to be able to budget the exact mortgage payment for the length of the term. Longer fixed terms tend to carry higher rates; the buyer pays extra to avoid the risk of rising rates.
Fixed-rate mortgages are great for first-time homebuyers, people with unsettled finances and anyone who enjoys the peace of mind of knowing exactly how much the mortgage payments will be. There are different types of fixed-rate mortgages that allow varying levels of payment flexibility:
  • Open fixed
  • Closed fixed
  • Convertible fixed

Variable-Rate Mortgages

Variable-rate mortgages typically offer the lowest rates possible. Lower rates are used to offset the potential risk of rates increasing in the future. If interest rates go down, more of the mortgage payment goes towards paying down the principal. In the event that interest rates increase, more of the payment goes towards interest, which results in the amortization period increasing as well. Variable-rate mortgages are available in both open and closed variations.
Find a mortgage broker who will take the time to understand your unique situation and financial history before providing advice about the fixed and variable mortgage products available. Choose an experienced mortgage broker with an AMP designation from CAAMP (Canadian Association of Accredited Mortgage Professionals) to ensure professional service and a comfortable experience throughout the entire process. Take advantage of a free consultation to discuss your mortgage goals and find the right mortgage specialist for you. 


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Lawrence Goldenstein | Mortgage Agent
Mortgage Intelligence        |        416-877-0806        |        lawrence@imortgageforyou.ca        |        www.lawrencegoldenstein.ca
609-255 Duncan Mill Road,   Toronto,   ON,   M3B 3H9,   Canada
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