Fixed vs variable comparison
Side-by-side payments for fixed and variable rates, with a stress slider for how variable could move. Decide what fits your appetite.
Your scenario
Result
Fixed vs variable in Canada — what changes when rates move
A fixed-rate mortgage locks the rate for the term length (typically 5 years). A variable-rate mortgage moves with the Bank of Canada's overnight rate via prime. Variable rates today sit roughly 50 bps below 5-year fixed, but variable holders take full exposure to BoC decisions every six weeks.
The break-even calculation
This calculator runs both scenarios side by side. The "variable move" slider lets you stress-test what happens if variable goes up OR down from today's level. Use it to find your personal break-even — the level of BoC rate hikes where variable stops winning.
Choose fixed when
- Payment certainty matters more than potential savings
- You're at the edge of qualifying — no room for a payment shock
- You'd lose sleep checking the BoC calendar every six weeks
Choose variable when
- You can comfortably absorb a 100-200 bps rate increase
- You believe BoC will hold or cut over the next 2-3 years
- You might break the mortgage early — variable penalties are 3 months interest vs IRD on fixed
Conversion privileges
Most Canadian variable mortgages let you convert to fixed any time during the term, at the lender's then-posted fixed rate. This is the "best of both worlds" framing — but the catch is you'll only convert at rates likely higher than what you could have locked in today.
Related
Questions about this calculator
- Is a fixed or variable mortgage better in Canada?
- Variable has historically cost less over full amortizations, but that is an average across decades and not a forecast. The real question is your breakeven: how far the variable rate would have to rise, and how fast, before it costs more than the fixed rate on offer today.
- What happens to my payment if the prime rate moves?
- It depends which variable product you hold. On an adjustable-rate mortgage the payment changes with prime. On a variable-rate mortgage with a fixed payment, the payment stays put and the split between principal and interest shifts — which can push you into negative amortization if rates rise far enough.
- Can I convert a variable mortgage to fixed?
- Most variable mortgages let you convert to a fixed term at any time without penalty. The catch is that you convert at the lender's fixed rates on that day, which are not necessarily competitive, and usually for a term at least as long as your remaining one.
- Which one has the smaller penalty if I break it?
- Variable, by a wide margin. Breaking a variable mortgage is normally three months' interest. Breaking a fixed mortgage triggers the interest rate differential, which on a big balance early in the term can be ten to twenty times larger.