{"id":804,"date":"2022-06-29T16:50:18","date_gmt":"2022-06-29T20:50:18","guid":{"rendered":"https:\/\/blog.mortgageinsurancegroup.ca\/?p=804"},"modified":"2022-06-29T17:48:48","modified_gmt":"2022-06-29T21:48:48","slug":"fixed-vs-variable-mortgage-rates-whats-the-difference","status":"publish","type":"post","link":"https:\/\/mortgageinsurancegroup.ca\/blog\/fixed-vs-variable-mortgage-rates-whats-the-difference\/","title":{"rendered":"Fixed vs Variable Mortgage Rates: What&#8217;s the Difference?"},"content":{"rendered":"\t\t<div data-elementor-type=\"wp-post\" data-elementor-id=\"804\" class=\"elementor elementor-804\" data-elementor-post-type=\"post\">\n\t\t\t\t\t\t<section class=\"elementor-section elementor-top-section elementor-element elementor-element-14c7f1c4 elementor-section-boxed elementor-section-height-default elementor-section-height-default\" data-id=\"14c7f1c4\" data-element_type=\"section\">\n\t\t\t\t\t\t<div class=\"elementor-container elementor-column-gap-default\">\n\t\t\t\t\t<div class=\"elementor-column elementor-col-100 elementor-top-column elementor-element elementor-element-28068374\" data-id=\"28068374\" data-element_type=\"column\">\n\t\t\t<div class=\"elementor-widget-wrap elementor-element-populated\">\n\t\t\t\t\t\t<div class=\"elementor-element elementor-element-6e179d1 elementor-widget elementor-widget-text-editor\" data-id=\"6e179d1\" data-element_type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t<p style=\"color: #000000;font-family: Arial, 'Yanone Kaffeesatz'\"><span style=\"font-weight: bolder\">Fixed vs variable mortgage; choosing a winner can be daunting for most Canadians looking to buy a home. But at the end of the day, both types of mortgage rates have their pros and cons.<\/span><\/p><p style=\"color: #000000;font-family: Arial, 'Yanone Kaffeesatz'\"><span style=\"font-weight: bolder\">In this article, we&#8217;ll compare fixed and variable rate mortgages. Then you can know exactly which type of mortgage is better for you and your family.<\/span><\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-3895c92 elementor-toc--minimized-on-tablet elementor-widget elementor-widget-table-of-contents\" data-id=\"3895c92\" data-element_type=\"widget\" data-settings=\"{&quot;exclude_headings_by_selector&quot;:&quot;#No-ToC&quot;,&quot;marker_view&quot;:&quot;bullets&quot;,&quot;icon&quot;:{&quot;value&quot;:&quot;fas fa-chevron-right&quot;,&quot;library&quot;:&quot;fa-solid&quot;},&quot;container&quot;:&quot;section.elementor-section.elementor-top-section.elementor-element.elementor-element-7bf65197.elementor-section-boxed.elementor-section-height-default.elementor-section-height-default&quot;,&quot;headings_by_tags&quot;:[&quot;h2&quot;,&quot;h3&quot;,&quot;h4&quot;,&quot;h5&quot;,&quot;h6&quot;],&quot;minimize_box&quot;:&quot;yes&quot;,&quot;minimized_on&quot;:&quot;tablet&quot;,&quot;hierarchical_view&quot;:&quot;yes&quot;,&quot;min_height&quot;:{&quot;unit&quot;:&quot;px&quot;,&quot;size&quot;:&quot;&quot;,&quot;sizes&quot;:[]},&quot;min_height_tablet&quot;:{&quot;unit&quot;:&quot;px&quot;,&quot;size&quot;:&quot;&quot;,&quot;sizes&quot;:[]},&quot;min_height_mobile&quot;:{&quot;unit&quot;:&quot;px&quot;,&quot;size&quot;:&quot;&quot;,&quot;sizes&quot;:[]}}\" data-widget_type=\"table-of-contents.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t<div class=\"elementor-toc__header\">\n\t\t\t<h2 class=\"elementor-toc__header-title\">\n\t\t\t\tTable of Contents\t\t\t<\/h2>\n\t\t\t\t\t\t\t<div class=\"elementor-toc__toggle-button elementor-toc__toggle-button--expand\" role=\"button\" tabindex=\"0\" aria-controls=\"elementor-toc__3895c92\" aria-expanded=\"true\" aria-label=\"Open table of contents\"><i aria-hidden=\"true\" class=\"fas fa-chevron-down\"><\/i><\/div>\n\t\t\t\t<div class=\"elementor-toc__toggle-button elementor-toc__toggle-button--collapse\" role=\"button\" tabindex=\"0\" aria-controls=\"elementor-toc__3895c92\" aria-expanded=\"true\" aria-label=\"Close table of contents\"><i aria-hidden=\"true\" class=\"fas fa-chevron-up\"><\/i><\/div>\n\t\t\t\t\t<\/div>\n\t\t<div id=\"elementor-toc__3895c92\" class=\"elementor-toc__body\">\n\t\t\t<div class=\"elementor-toc__spinner-container\">\n\t\t\t\t<i class=\"elementor-toc__spinner eicon-animation-spin eicon-loading\" aria-hidden=\"true\"><\/i>\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-232f9a09 elementor-widget elementor-widget-text-editor\" data-id=\"232f9a09\" data-element_type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t<h2>Fixed vs Variable Mortgage Rates: Which is Better?<\/h2><p>&#8220;Better&#8221; means different things to different people. In other words, while the benefits of a fixed rate mortgage may be enjoyed by some, a variable rate mortgage may be the wiser choice for others.<\/p><p>Ultimately, the best choice for you and your family depends on first knowing your goals, and then adjusting your expectations. Once you do that, you can determine your risk tolerance and find out which <a href=\"https:\/\/www.theglobeandmail.com\/business\/article-fixed-or-variable-how-to-decide-as-interest-rates-rise\/\" target=\"_blank\" rel=\"noopener\">type of mortgage<\/a> is the best choice.<\/p><p>That means before we compare fixed and variable rate mortgages, you first need to take the time to ask yourself these important questions. Trust us, this will make understanding your best options much easier.<\/p><p><b>&#8230;And with that said, let&#8217;s get into it!<\/b><\/p><p><img fetchpriority=\"high\" decoding=\"async\" src=\"https:\/\/blog.mortgageinsurancegroup.ca\/wp-content\/uploads\/sites\/18\/2022\/06\/1.-adeolu-eletu-unRkg2jH1j0-unsplash.jpeg\" alt=\"Becoming a personal finance expert means understanding your goals, and setting your expectations. Then you can decide on a fixed mortgage, or variable interest rate.\" width=\"600\" height=\"398\" \/><\/p><h2>Questions You Need to Ask Before You Decide on a Mortgage<\/h2><h3>1. Know Your Goals<\/h3><p>Conveniently, most Canadian mortgages are broken into five year terms. This makes it much more tangible to set your goals.<\/p><p>The main thing you&#8217;ll want to focus on in this step are the financial goals for you and your family. Where do you want to be when you <a href=\"https:\/\/blog.mortgageinsurancegroup.ca\/renewing-mortgage-what-banks-dont-want-you-to-know\/\"><u>renew your next mortgage term<\/u><\/a>?<\/p><p>Please note, if your term is set for five years, plan your goals around five years. If it&#8217;s for 10 years, plan for 10 years.<\/p><h4 id=\"No-ToC\">Key Questions:<\/h4><ul><li>Do I plan to sell the house in the next 5 years?<\/li><li>How much debt will I be able to repay?<\/li><li>Will I be having children?<\/li><li>Will my children be starting school or university?<\/li><\/ul><p><img decoding=\"async\" src=\"https:\/\/blog.mortgageinsurancegroup.ca\/wp-content\/uploads\/sites\/18\/2022\/06\/2.-firmbee-com-gcsNOsPEXfs-unsplash.jpeg\" alt=\"In order to choose the best type of mortgage rate for you and your family, you need t0 adjust reasonable expectations about your financial goals.\" width=\"600\" height=\"398\" \/><\/p><h3>2. Adjust Your Expectations<\/h3><p>Now that you have your financial goals, you need to take a hard look at your current environment. That means everything from the economy at large, to your health prospects.<\/p><p>For example, is there a health condition in your family that could become a problem down the line? Are you hearing a lot about a recession in the news?<\/p><p>Essentially, this step is about understanding how much uncertainty there is between you and the goals you set in the first step.<\/p><h4 id=\"No-ToC\">Key Questions:<\/h4><ul><li>What is the inflation rate right now?<\/li><li>Can I qualify for my bank&#8217;s prime rate?<\/li><li>Do any health issues run in my family?<\/li><li>Do I expect to take on any major expenses in the new few upcoming years?<\/li><\/ul><p><img decoding=\"async\" src=\"https:\/\/blog.mortgageinsurancegroup.ca\/wp-content\/uploads\/sites\/18\/2022\/06\/3.-firmbee-com-SpVHcbuKi6E-unsplash.jpeg\" alt=\"You don't need to be a certified financial planner in order to figure out how much risk your investments can have.\" width=\"600\" height=\"398\" \/><\/p><h3>3. Determine Your Risk Tolerance<\/h3><p>Now that you know the potential barriers between you and your goals, think about how likely you are to overcome that uncertainty.<\/p><p>Let&#8217;s go back to the example mentioned earlier. Perhaps the health issue in your family is unlikely to affect you until you are much older, or maybe you have insurance protection.<\/p><p>In short, the point of this step is to give you a better idea on the chance you will overcome financial uncertainty.<\/p><h4 id=\"No-ToC\">Key Questions:<\/h4><ul><li>Does my family depend on a sole-income provider?<\/li><li>How seriously has my career been affected by past recessions?<\/li><li>Do I have financial protection in place?<\/li><li>How stable is my household income?<\/li><\/ul><p><img loading=\"lazy\" decoding=\"async\" src=\"https:\/\/blog.mortgageinsurancegroup.ca\/wp-content\/uploads\/sites\/18\/2022\/06\/4.-loic-leray-fCzSfVIQlVY-unsplash.jpeg\" alt=\"Even when you have a stable income, when borrowing money for a mortgage, you need to know how much risk you can tolerate.\" width=\"600\" height=\"399\" \/><\/p><p><strong>So now that you&#8217;ve assessed your current situation, let&#8217;s compare the two main types of mortgage rates in Canada&#8230;<\/strong><\/p><hr \/><h2>Comparison Chart: Fixed vs Variable Mortgage<\/h2><p>Use this chart to better understand the differences between fixed and variable mortgage rates.<\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-1464539 pp-table-center elementor-widget elementor-widget-pp-table\" data-id=\"1464539\" data-element_type=\"widget\" data-settings=\"{&quot;table_type&quot;:&quot;responsive&quot;,&quot;scrollable&quot;:&quot;no&quot;}\" data-widget_type=\"pp-table.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t<div class=\"pp-table-container\">\n\t\t\t<table \n\t\t\tclass=\"pp-table tablesaw\" data-tablesaw-mode=\"stack\"\t\t\t\t>\n\t\t\t\t\t\t\t<colgroup>\n\t\t\t\t\t\t\t\t<col\n\t\t\t\t\tspan=\"1\"\n\t\t\t\t\tclass=\"elementor-repeater-item-3ee3a16\"\n\t\t\t\t\t\t\t\t\t\t\tstyle=\"\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\"\n\t\t\t\t\t\t\t\t\t\t>\n\t\t\t\t\t\t\t<\/colgroup>\n\t\t\t\t\t\t<thead>\n\t\t\t\t<tr class=\"pp-table-row\">\n\t\t\t\t\t<th class=\"pp-table-cell pp-table-cell-3573109\"><span class=\"pp-table-cell-content\"><span class=\"pp-table-cell-text\"><\/span><\/span><\/th><th class=\"pp-table-cell pp-table-cell-5b0c52f\"><span class=\"pp-table-cell-content\"><span class=\"pp-table-cell-text\">Fixed Rate Mortgage<\/span><\/span><\/th><th class=\"pp-table-cell pp-table-cell-9d8ff1e\"><span class=\"pp-table-cell-content\"><span class=\"pp-table-cell-text\">Variable Rate Mortgage<\/span><\/span><\/th>\t\t\t\t<\/tr>\n\t\t\t<\/thead>\n\t\t\t\t\t<tfoot>\n\t\t\t<\/tr>\t\t<\/tfoot>\n\t\t\t\t<tbody>\n\t\t\t<tr ><th class=\"pp-table-cell pp-table-cell-4f6072e\"><span class=\"pp-table-cell-content\"><span class=\"pp-table-cell-text\"><h4>What are they?<\/h4><\/span><\/span><\/th><td class=\"pp-table-cell pp-table-cell-fadd1e2\"><span class=\"pp-table-cell-content\"><span class=\"pp-table-cell-text\"><p>A fixed rate means your mortgage payment will not change for the duration of the term. Therefore only when you renew your term, could your monthly payments change.<\/p>\n<p>Keep in mind, your mortgage interest rate will be more money since banks can\u2019t raise your rate, and need to plan for uncertainty.<\/p><\/span><\/span><\/td><td class=\"pp-table-cell pp-table-cell-d15b98c\"><span class=\"pp-table-cell-content\"><span class=\"pp-table-cell-text\"><p>A variable rate means either; what you pay may go up during the mortgage term, or your rate stays the same but you\u2019re paying interest more than principal.<\/p>\n<p>These interest rates rise and fall when your bank\u2019s prime rate adjusts with the central bank rate.<\/p><\/span><\/span><\/td><\/tr><tr ><th class=\"pp-table-cell pp-table-cell-f341be3\"><span class=\"pp-table-cell-content\"><span class=\"pp-table-cell-text\"><h4>Which is Best for a Low or High Risk Tolerance?<\/h4><\/span><\/span><\/th><td class=\"pp-table-cell pp-table-cell-a1c9d2d\"><span class=\"pp-table-cell-content\"><span class=\"pp-table-cell-text\"><p><b>Low:<\/b>\u00a0Fixed rate mortgages are\u00a0<u>less risky<\/u>\u00a0because your interest rate and payment stay the same for the entire term.<\/p>\n<p>That means mortgage holders don\u2019t ever have to worry about a sudden hike in their current mortgage rates.<\/p><\/span><\/span><\/td><td class=\"pp-table-cell pp-table-cell-853807a\"><span class=\"pp-table-cell-content\"><span class=\"pp-table-cell-text\"><p><b>High:<\/b>\u00a0Variable rate mortgages are\u00a0<u>more risky<\/u>\u00a0as your interest rates rise and fall with the Bank of Canada\u2019s key interest rate.<\/p>\n<p>This either effects your payments, or the time it takes to pay your mortgage.<\/p><\/span><\/span><\/td><\/tr><tr ><th class=\"pp-table-cell pp-table-cell-ebbf081\"><span class=\"pp-table-cell-content\"><span class=\"pp-table-cell-text\"><h4>Which has Smaller Monthly Payments?<\/h4><\/span><\/span><\/th><td class=\"pp-table-cell pp-table-cell-0ff94d1\"><span class=\"pp-table-cell-content\"><span class=\"pp-table-cell-text\"><p>Fixed rate mortgages may need more interest payments made overall.<\/p>\n<p>Since your mortgage lender cannot increase your rate for the mortgage term, your initial interest rate needs to include a small buffer. This may mean a slightly higher monthly payment.<\/p><\/span><\/span><\/td><td class=\"pp-table-cell pp-table-cell-bd859cb\"><span class=\"pp-table-cell-content\"><span class=\"pp-table-cell-text\"><p>Variable rates offer the potential for lower payments if the Bank of Canada drops their key policy rate.<\/p>\n<p>Furthermore, since mortgage lenders are able to adjust your rate as needed, they don\u2019t need to increase your rate for uncertainty.<\/p><\/span><\/span><\/td><\/tr><tr ><th class=\"pp-table-cell pp-table-cell-27cae87\"><span class=\"pp-table-cell-content\"><span class=\"pp-table-cell-text\"><h4>Which Cost Less in Total?<\/h4><\/span><\/span><\/th><td class=\"pp-table-cell pp-table-cell-42487bb\"><span class=\"pp-table-cell-content\"><span class=\"pp-table-cell-text\"><p>More money tends to go into fixed rates. Your mortgage broker will need to charge a little bit higher interest rates since they can\u2019t increase your rate.<\/p>\n<p>Even though a fixed rate is secured by stable bond yields, financial institutions need to account for that tiny bit of uncertainty.<\/p><\/span><\/span><\/td><td class=\"pp-table-cell pp-table-cell-9a7c28c\"><span class=\"pp-table-cell-content\"><span class=\"pp-table-cell-text\"><p>Many studies have found variable rate mortgages tend to cost less overall, even during times when interest rates rise.<\/p>\n<p>Of course, these studies rarely go back earlier than the 1950's, and that may not be enough certainty for some people.<\/p><\/span><\/span><\/td><\/tr><tr ><th class=\"pp-table-cell pp-table-cell-bb321e3\"><span class=\"pp-table-cell-content\"><span class=\"pp-table-cell-text\"><h4>Which is More Popular Among Canadians?<\/h4><\/span><\/span><\/th><td class=\"pp-table-cell pp-table-cell-9f4d0d4\"><span class=\"pp-table-cell-content\"><span class=\"pp-table-cell-text\"><p>The vast majority of Canadians go for fixed rates.<\/p>\n<p>In 2016, it was found that 74% of homeowners had fixed mortgage rates.<\/p><\/span><\/span><\/td><td class=\"pp-table-cell pp-table-cell-7fa9ff8\"><span class=\"pp-table-cell-content\"><span class=\"pp-table-cell-text\"><p>With only a little over a quarter of Canadians preferring a variable rate mortgage, they are clearly less popular despite their historical value of having lower interest rates.<\/p><\/span><\/span><\/td><\/tr><tr ><th class=\"pp-table-cell pp-table-cell-381154e\"><span class=\"pp-table-cell-content\"><span class=\"pp-table-cell-text\"><h4>What Factors Influence this Type of Mortgage?<\/h4><\/span><\/span><\/th><td class=\"pp-table-cell pp-table-cell-c8bc51d\"><span class=\"pp-table-cell-content\"><span class=\"pp-table-cell-text\"><p><b>Bond yields<\/b> are the main thing to determine your monthly mortgage payments. Bonds are secured by governments, and issued in terms.<\/p>\n<p>That makes them a very safe and stable way for banks to secure your mortgage term.<\/p><\/span><\/span><\/td><td class=\"pp-table-cell pp-table-cell-4e694a1\"><span class=\"pp-table-cell-content\"><span class=\"pp-table-cell-text\"><p>Your bank\u2019s <b>prime lending rate<\/b> is used to determine these mortgages.<\/p>\n<p>Prime rates can potentially increase if the Bank of Canada increases their key interest rate. That means, your monthly payments can go up and down.<\/p><\/span><\/span><\/td><\/tr>\t\t<\/tbody>\n\t\t\t\t\t<\/table>\n\t\t<\/div>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-696c727 elementor-widget elementor-widget-text-editor\" data-id=\"696c727\" data-element_type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t<ul style=\"font-size: 16px\"><li style=\"font-size: 16px\"><span style=\"font-weight: bolder\">KEEP READING:&nbsp;<a href=\"https:\/\/blog.mortgageinsurancegroup.ca\/rising-interest-rates-are-mortgage-rates-going-down-anytime-soon\/\">Rising Interest Rates: Are Mortgage Rates Going Down Anytime Soon?<\/a><\/span><\/li><\/ul><p><img loading=\"lazy\" decoding=\"async\" src=\"https:\/\/blog.mortgageinsurancegroup.ca\/wp-content\/uploads\/sites\/18\/2022\/06\/5.-piggybank-p8KbU9-wstc-unsplash-1.jpeg\" alt=\"Different market rates affect your mortgage payment. Your five-year fixed mortgage is influenced by the bond market. Meanwhile, variable rates take their cues from the Bank of Canada's key policy rate.\" width=\"600\" height=\"360\"><\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-b0eb6fe pp-table-left elementor-widget elementor-widget-pp-table\" data-id=\"b0eb6fe\" data-element_type=\"widget\" data-settings=\"{&quot;table_type&quot;:&quot;responsive&quot;,&quot;scrollable&quot;:&quot;no&quot;}\" data-widget_type=\"pp-table.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t<div class=\"pp-table-container\">\n\t\t\t<table \n\t\t\tclass=\"pp-table tablesaw\" data-tablesaw-mode=\"stack\"\t\t\t\t>\n\t\t\t\t\t\t\t<colgroup>\n\t\t\t\t\t\t\t\t<col\n\t\t\t\t\tspan=\"1\"\n\t\t\t\t\tclass=\"elementor-repeater-item-3ee3a16\"\n\t\t\t\t\t\t\t\t\t\t\tstyle=\"\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\"\n\t\t\t\t\t\t\t\t\t\t>\n\t\t\t\t\t\t\t<\/colgroup>\n\t\t\t\t\t\t<thead>\n\t\t\t\t<tr class=\"pp-table-row\">\n\t\t\t\t\t<th class=\"pp-table-cell pp-table-cell-3573109\"><span class=\"pp-table-cell-content\"><span class=\"pp-table-cell-text\"><\/span><\/span><\/th><th class=\"pp-table-cell pp-table-cell-5b0c52f\"><span class=\"pp-table-cell-content\"><span class=\"pp-table-cell-text\">Fixed Rate Mortgage<\/span><\/span><\/th><th class=\"pp-table-cell pp-table-cell-9d8ff1e\"><span class=\"pp-table-cell-content\"><span class=\"pp-table-cell-text\">Variable Rate Mortgage<\/span><\/span><\/th>\t\t\t\t<\/tr>\n\t\t\t<\/thead>\n\t\t\t\t\t<tfoot>\n\t\t\t<\/tr>\t\t<\/tfoot>\n\t\t\t\t<tbody>\n\t\t\t<tr ><th class=\"pp-table-cell pp-table-cell-4f6072e\"><span class=\"pp-table-cell-content\"><span class=\"pp-table-cell-text\"><h4>What Gets You a Better Mortgage Rate?<\/h4><\/span><\/span><\/th><td class=\"pp-table-cell pp-table-cell-fadd1e2\"><span class=\"pp-table-cell-content\"><span class=\"pp-table-cell-text\"><p>Shop around! If you don\u2019t know where to start, find a mortgage broker. <\/p>\n<p>That's because they\u2019ll shop around for you to find you the best interest rate possible from a financial institution.<\/p><\/span><\/span><\/td><td class=\"pp-table-cell pp-table-cell-d15b98c\"><span class=\"pp-table-cell-content\"><span class=\"pp-table-cell-text\"><p>You can get a better rate with your variable mortgage when you have good credit with your bank.<\/p>\n<p>The lowest interest rate major banks will give you is their prime lending rate which is the baseline for variable rate mortgages.<\/p><\/span><\/span><\/td><\/tr><tr ><th class=\"pp-table-cell pp-table-cell-f341be3\"><span class=\"pp-table-cell-content\"><span class=\"pp-table-cell-text\"><h4>What Gets You a Worse Rate?<\/h4><\/span><\/span><\/th><td class=\"pp-table-cell pp-table-cell-a1c9d2d\"><span class=\"pp-table-cell-content\"><span class=\"pp-table-cell-text\"><p>Fixed rate mortgages are influenced by the Canadian economy more generally. That\u2019s because your financial institution secures them with bond yields.<\/p>\n<p>When the Canadian economy struggles, fixed rates will eventually be affected.<\/p><\/span><\/span><\/td><td class=\"pp-table-cell pp-table-cell-853807a\"><span class=\"pp-table-cell-content\"><span class=\"pp-table-cell-text\"><p>When the Bank of Canada raises their key policy rate, major banks have to raise their prime lending rates.<\/p>\n<p>In addition to when interest rates increase, having bad credit with your bank will also impact your variable rate mortgage.<\/p><\/span><\/span><\/td><\/tr><tr ><th class=\"pp-table-cell pp-table-cell-ebbf081\"><span class=\"pp-table-cell-content\"><span class=\"pp-table-cell-text\"><h4>What Happens if You Need to Move or Cancel?<\/h4><\/span><\/span><\/th><td class=\"pp-table-cell pp-table-cell-0ff94d1\"><span class=\"pp-table-cell-content\"><span class=\"pp-table-cell-text\"><p>Most banks will charge you the\u00a0<b>interest rate differential<\/b>, <i>i.e. the difference between the interest rate at the start of your term, and the interest rate at the time of cancelling.<\/i><\/p>\n<p>It usually doesn\u2019t matter whether you are moving to a new house or cancelling for another reason.<\/p><\/span><\/span><\/td><td class=\"pp-table-cell pp-table-cell-bd859cb\"><span class=\"pp-table-cell-content\"><span class=\"pp-table-cell-text\"><p>A variable rate mortgage is much easier to break. You may be charged extra fees, but they won\u2019t be as much as canceling with a fixed rate.<\/p>\n<p>Often the penalty is only a few months worth of interest payments.<\/p><\/span><\/span><\/td><\/tr>\t\t<\/tbody>\n\t\t\t\t\t<\/table>\n\t\t<\/div>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-05282fb elementor-widget elementor-widget-text-editor\" data-id=\"05282fb\" data-element_type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t<ul style=\"font-size: 16px\"><li style=\"font-size: 16px\"><span style=\"font-weight: bolder\">READ MORE:&nbsp;<a href=\"https:\/\/blog.mortgageinsurancegroup.ca\/renewing-mortgage-what-banks-dont-want-you-to-know\/\">Renewing Mortgage in 2022? Here\u2019s What Banks Don\u2019t Want You to Know.<\/a><\/span><\/li><\/ul><p><img loading=\"lazy\" decoding=\"async\" src=\"https:\/\/blog.mortgageinsurancegroup.ca\/wp-content\/uploads\/sites\/18\/2022\/06\/6.-hiveboxx-FwdWO5yEo5s-unsplash.jpeg\" alt=\"The amortization period of your mortgage may be more or less depending on if you go with fixed or variable rates. Lower interest rates mean you can pay your mortgage sooner.\" width=\"600\" height=\"399\"><\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-d3c316e pp-table-left elementor-widget elementor-widget-pp-table\" data-id=\"d3c316e\" data-element_type=\"widget\" data-settings=\"{&quot;table_type&quot;:&quot;responsive&quot;,&quot;scrollable&quot;:&quot;no&quot;}\" data-widget_type=\"pp-table.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t<div class=\"pp-table-container\">\n\t\t\t<table \n\t\t\tclass=\"pp-table tablesaw\" data-tablesaw-mode=\"stack\"\t\t\t\t>\n\t\t\t\t\t\t\t<colgroup>\n\t\t\t\t\t\t\t\t<col\n\t\t\t\t\tspan=\"1\"\n\t\t\t\t\tclass=\"elementor-repeater-item-3ee3a16\"\n\t\t\t\t\t\t\t\t\t\t\tstyle=\"\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\"\n\t\t\t\t\t\t\t\t\t\t>\n\t\t\t\t\t\t\t<\/colgroup>\n\t\t\t\t\t\t<thead>\n\t\t\t\t<tr class=\"pp-table-row\">\n\t\t\t\t\t<th class=\"pp-table-cell pp-table-cell-3573109\"><span class=\"pp-table-cell-content\"><span class=\"pp-table-cell-text\"><\/span><\/span><\/th><th class=\"pp-table-cell pp-table-cell-5b0c52f\"><span class=\"pp-table-cell-content\"><span class=\"pp-table-cell-text\">Fixed Rate Mortgage<\/span><\/span><\/th><th class=\"pp-table-cell pp-table-cell-9d8ff1e\"><span class=\"pp-table-cell-content\"><span class=\"pp-table-cell-text\">Variable Rate Mortgage<\/span><\/span><\/th>\t\t\t\t<\/tr>\n\t\t\t<\/thead>\n\t\t\t\t\t<tfoot>\n\t\t\t<\/tr>\t\t<\/tfoot>\n\t\t\t\t<tbody>\n\t\t\t<tr ><th class=\"pp-table-cell pp-table-cell-4f6072e\"><span class=\"pp-table-cell-content\"><span class=\"pp-table-cell-text\"><h4>How Can You Pay Your Mortgage Faster?<\/h4><\/span><\/span><\/th><td class=\"pp-table-cell pp-table-cell-fadd1e2\"><span class=\"pp-table-cell-content\"><span class=\"pp-table-cell-text\"><p>Fixed mortgage rates are often just that, <i>fixed<\/i>.<\/p>\n<p>However, many Canadian banks allow you to increase your payments up to a certain percentage.<\/p>\n<p>Talk to your bank to find out if that's an option. Make sure you also ask about hidden fees and penalties before you pay it off!<\/p><\/span><\/span><\/td><td class=\"pp-table-cell pp-table-cell-d15b98c\"><span class=\"pp-table-cell-content\"><span class=\"pp-table-cell-text\"><p>Being able to pay a variable mortgage faster than the term can sometimes be arranged in the mortgage contract.<\/p>\n<p>However like a fixed rate, you may end up with hidden fees and penalties.<\/p>\n<p>With that said, these charges are still often less than with a fixed rate.<\/p><\/span><\/span><\/td><\/tr><tr ><th class=\"pp-table-cell pp-table-cell-f341be3\"><span class=\"pp-table-cell-content\"><span class=\"pp-table-cell-text\"><h4>Can I Switch to the Other Type?<\/h4><\/span><\/span><\/th><td class=\"pp-table-cell pp-table-cell-a1c9d2d\"><span class=\"pp-table-cell-content\"><span class=\"pp-table-cell-text\">No, You cannot switch a fixed rate mortgage into a variable rate.<\/span><\/span><\/td><td class=\"pp-table-cell pp-table-cell-853807a\"><span class=\"pp-table-cell-content\"><span class=\"pp-table-cell-text\"><p>Yes, most mortgage lenders allow you to switch your variable rate to a fixed rate at anytime.<\/p>\n<p>However, banks don't always guaranteed it. That means you need to talk to your bank if you are interested in having this option.<\/p><\/span><\/span><\/td><\/tr>\t\t<\/tbody>\n\t\t\t\t\t<\/table>\n\t\t<\/div>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-d260713 elementor-widget elementor-widget-text-editor\" data-id=\"d260713\" data-element_type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t<hr \/><h2>Fixed vs Variable Mortgage Summary<\/h2><p><b>A fixed rate mortgage<\/b> is better for people that want stability. That&#8217;s because your mortgage rates stay the same for the whole term. However, that comes at the expense of not getting the lowest interest rate possible. Moreover, you may receive extra charges if you need to cancel.<\/p><p><b>Variable rate mortgages<\/b> have historically cost less money overall, but your rates may rise and fall throughout the duration of the term. With that said, you may have the option to switch to a fixed rate at anytime.<\/p><p><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter wp-image-821 size-full\" src=\"https:\/\/blog.mortgageinsurancegroup.ca\/wp-content\/uploads\/sites\/18\/2022\/06\/7.-krakenimages-376KN_ISplE-unsplash.jpeg\" alt=\"Fixed vs Variable Mortgage: Variable offers the possibility to have your principal repaid sooner if the interest rate is lower. A lower prime rate means you could pay off a larger loan sooner than a 5 year fixed rate mortgage.\" width=\"600\" height=\"400\" srcset=\"https:\/\/mortgageinsurancegroup.ca\/blog\/wp-content\/uploads\/sites\/18\/2022\/06\/7.-krakenimages-376KN_ISplE-unsplash.jpeg 600w, https:\/\/mortgageinsurancegroup.ca\/blog\/wp-content\/uploads\/sites\/18\/2022\/06\/7.-krakenimages-376KN_ISplE-unsplash-300x200.jpeg 300w\" sizes=\"(max-width: 600px) 100vw, 600px\" \/><\/p><hr \/><h2>Key Takeaways<\/h2><ul class=\"li-key\"><li><b>When comparing fixed vs variable mortgage rates, know\u00a0<a href=\"https:\/\/www.nerdwallet.com\/ca\/mortgages\/fixed-vs-variable-mortgage\" target=\"_blank\" rel=\"noopener\">both<\/a> have pros and cons<\/b><\/li><li><b>To make the best decision, you need to know your goals and set reasonable expectations<\/b><\/li><li><b>Payments with a fixed rate mortgage stay the same for the entire duration of your mortgage term<\/b><\/li><li><b>Payments with a variable rate mortgage go up and down during the term<\/b><\/li><li><b>Canada&#8217;s bond yields influence mortgages with fixed rates<\/b><\/li><li><b>A major bank&#8217;s prime rate affects variable rate mortgages<\/b><\/li><li><b>The Bank of Canada&#8217;s key policy rate dictates your bank&#8217;s prime rate<\/b><\/li><\/ul><hr \/><p><b>Don&#8217;t Let Uncertainty Get in the Way of Your Future.<\/b><\/p><h2 id=\"No-ToC\">Protecting Canadian Homeowners,<br \/><u>NOT<\/u> Their Banks.<\/h2><p>If you&#8217;ve ever met with a mortgage lender, you know all too well that they&#8217;ll try to sell you mortgage insurance protection. However, this insurance is designed to protect the bank&#8217;s money, not you and your family.<\/p><p>That&#8217;s because these only protect the remaining balance of your mortgage \u2014 <u>Not<\/u> your home&#8217;s actual value. You should know, there&#8217;s a much better way.<\/p><p>For people that want flexible protection for their mortgage but don&#8217;t want<b> <\/b>their protection to decrease in value over time, consider a policy from Mortgage Insurance Group.<\/p><ul><li>Your benefit never loses value \u2014 if you&#8217;re covered for 500k, you will receive 500k<\/li><li>You never have to undergo a medical exam, or visit a doctor<\/li><li>Guaranteed acceptance, even if you have pre-existing conditions<\/li><\/ul><p>Get a quote in minutes by following the button below and filling out the quick questions. After that, one of our expert team members will get in touch with you right away!<\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-dd4d59d elementor-align-center elementor-widget elementor-widget-button\" data-id=\"dd4d59d\" data-element_type=\"widget\" data-widget_type=\"button.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t<div class=\"elementor-button-wrapper\">\n\t\t\t\t\t<a class=\"elementor-button elementor-button-link elementor-size-lg elementor-animation-grow\" href=\"#\">\n\t\t\t\t\t\t<span class=\"elementor-button-content-wrapper\">\n\t\t\t\t\t\t\t\t\t<span class=\"elementor-button-text\">PROTECT YOUR MORTGAGE NOW<\/span>\n\t\t\t\t\t<\/span>\n\t\t\t\t\t<\/a>\n\t\t\t\t<\/div>\n\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t<\/div>\n\t\t","protected":false},"excerpt":{"rendered":"<p>Fixed vs variable mortgage; choosing a winner can be daunting for most Canadians looking to buy a home. But at the end of the day, both types of mortgage rates have their pros and cons. In this article, we&#8217;ll compare fixed and variable rate mortgages. Then you can know exactly which type of mortgage is [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":805,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"rop_custom_images_group":[],"rop_custom_messages_group":[],"rop_publish_now":"initial","rop_publish_now_accounts":[],"rop_publish_now_history":[],"rop_publish_now_status":"pending","wp_social_preview_title":"","wp_social_preview_description":"","wp_social_preview_image":0,"footnotes":""},"categories":[22,19],"tags":[],"class_list":["post-804","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-buying-a-home","category-mortgage-life-insurance"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v26.6 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Fixed vs Variable Mortgage Rates: What&#039;s the Difference?<\/title>\n<meta name=\"description\" content=\"Fixed vs variable mortgage rates: It&#039;s a tough choice for most Canadians. 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