MAKE AN INFORMED DECISION
Fixed versus variable mortgages: what should you compare?
The lowest initial rate does not guarantee the lowest overall cost. Choosing between fixed and variable rates depends on cash-flow flexibility, risk tolerance, time horizon and the terms of the loan.
What remains fixed and what can change
A fixed mortgage rate generally stays unchanged throughout the contracted term, making the stated payment easier to plan. A variable mortgage rate can rise or fall with the rate benchmark specified in the agreement. Depending on the lender, the payment amount may change, or a relatively stable payment may cover a shifting proportion of principal and interest.
Two products described as “variable” can react differently to an increase in rates. Compare the contract mechanics rather than the starting percentage alone.
Illustration: a $300,000 mortgage and a 1-point change
Assuming $300,000 financed over 20 years, regular monthly payments and a constant annual nominal rate compounded semiannually:
| Illustrative rate | Monthly payment | Difference |
|---|---|---|
| 4.50% | $1,891.22 | Baseline |
| 5.50% | $2,053.17 | +$161.95/month |
This is a rate-sensitivity example, not a prediction of how variable rates will move or an exact representation of every variable-rate product’s compounding rules.
Break penalties matter too
Ending a closed mortgage before the term expires may trigger substantial charges. Depending on the contract, the fee may involve three months of interest or an interest rate differential. Portability and prepayment privileges can also affect the decision.
Learn how lender-specific methods work in the mortgage prepayment penalties guide.
Questions worth asking
Will the payment change if the benchmark rises? What happens to the remaining amortization? Is there a trigger rate? How much can be prepaid each year? Can the mortgage be ported to another home? How are early-break fees determined? Which terms apply at renewal?
Do not assume the features of one lender’s mortgage apply to all institutions.
A calculator is a scenario, not a forecast
The free Québec mortgage calculator estimates the payment at a chosen fixed illustrative rate and shows sensitivity to a one-point increase. It does not forecast future rates, quote a loan offer or compare real-time lender rates.
Official references
Rules reviewed November 4, 2026. Illustrations, not contract estimates or rate commitments.