When buying or refinancing a home one of the biggest decisions in Canada is whether to go with a fixed or variable mortgage since each type of mortgage has benefits and risks and what would be the best option depends on your financial situation, risk profile, and goals.
✅ What Is a Fixed Mortgage?
A fixed mortgage is backed by a fixed interest rate over the term of the loan, which means your monthly payments will NEVER change. This can be beneficial as it provides stability and predictability to the payment. A fixed mortgage is generally a popular option for first-time buyers, or buyers in general who would like to stick with a clear and consistent-payment option.
Benefits:
-Consistent monthly payments
-Protection against rising interest rates
-Easier budgeting for entire period
Drawbacks:
-Usually has a higher-interest rate to start or initially
-Less flexible to take advantage of being able to get lower-interest rates and still have an overall lower cost to borrow
✅ What Is a Variable Mortgage?
A variable mortgage (also called an adjustable-rate mortgage) has a variable interest rate, which fluctuates based on market conditions. Therefore, a variable mortgage can either go up or down with the interest rates. For example, if interest rates go down your payments can go down. Likewise, if interest rates go up as variable mortgage interest rates change in time, your payments can also go up.
Benefits:
-Usually a low initial interest rate when compared to a fixed mortgage
-Possible savings if interest rates stay low
Drawbacks:
-Payments can fluctuate
-Less predictability when budgeting in the long-term
✅ Which Mortgage Is Better in 2025?
By 2025, interest rates in Canada are expected to fluctuate considerably less than the variability they have experienced nationally or locally the last 2-3 years. For homebuyers in Edmonton or Alberta, something to explore is if there is a possibility to take both mortgage options.
You could even ask yourself the following questions:
-Are you staying in your home long-term?
-Do you want fixed and definite payments?
-Are you willing to accept risk in anticipation for savings?
If you are still unsure, you also have the option of obtaining a hybrid mortgage (part fixed, part variable).
✅ Get Personalised Advice from a Reputable Mortgage Agent
You don’t have to be confused by the mortgage options. You can speak and compare fixed vs variable mortgage options with a reputable qualified mortgage agent, Alejandra Diaz in Alberta, based on your goals and financial profile.
Alejandra has access to the top lenders across Canada to get you the best mortgage option available.
