Start with what each option actually changes
A fixed mortgage keeps the interest rate unchanged for the term, which normally keeps the scheduled payment predictable. A variable mortgage can rise or fall during the term. Depending on the product, the payment may adjust with the rate or remain fixed while the portion going to principal changes.
That distinction matters. The Financial Consumer Agency of Canada warns that with some fixed-payment variable mortgages, a rate increase can direct more of each payment to interest and less to principal. At a trigger point, the lender may require a higher payment or other action. Ask the lender to explain the payment type, trigger-rate language and conversion terms in writing before relying on the advertised rate.
- Fixed: steadier budgeting during the term, with less benefit if market rates fall
- Variable with adjustable payments: the payment can move as the rate changes
- Variable with fixed payments: the payment may stay level while principal repayment changes
- Hybrid: part fixed and part variable, with added complexity when transferring or renewing
Use a budget stress test—not a rate prediction
On October 28, 2026, the Bank of Canada increased its target for the overnight rate by 25 basis points to 2.5%. That policy rate is not the mortgage rate a lender will quote you, but changes can affect borrowing conditions and are a reminder that rates move in both directions.
Before choosing variable, ask for the payment at the offered rate and at least two higher-rate scenarios. If the higher payment would force you to reduce emergency savings, delay essential repairs or rely on credit, the apparent flexibility may not be worth the household risk. A fixed mortgage can be the sensible choice even when variable starts lower.
- Payment today and payment if the rate rises by one and two percentage points
- Emergency cash remaining after the down payment and closing costs
- Expected ownership period and the chance you may sell before the term ends
- Prepayment privileges, portability, conversion rights and break penalties
Apply the decision to the property and location
In South Delta, a detached home, newer townhome and older strata property can create very different monthly obligations after the mortgage payment. A buyer in Tsawwassen or Ladner should leave room for maintenance, insurance, property taxes and possible strata costs rather than using every available dollar to qualify.
The same discipline applies in Vancouver and Richmond, where strata fees, insurance deductibles, future building work and commuting choices can change the real monthly cost. William’s advice is to compare the mortgage and the property together. A rate product that feels manageable on a newer condo may be uncomfortable when paired with a home needing immediate work.
Questions to take to the lender or mortgage broker
Do not compare only the headline rate. Ask for a written comparison using the same mortgage amount, amortization, term and payment frequency. Then review the costs and restrictions that matter if your plan changes.
- Is the variable payment adjustable or fixed, and what happens at the trigger rate or trigger point?
- Can the mortgage be converted to fixed, and how would the new rate be determined?
- How is the prepayment penalty calculated for each option?
- Can the mortgage be ported if you sell and buy another home?
- What prepayment privileges apply, and when can they be used?
- What documents or property features could still affect final approval?