year fixed vs variable mortgage Canada
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TD 5-Year Fixed Rate Closed Mortgage
Pros
- Predictable monthly payments that help with budgeting.
- Protection against rising interest rates.
- Potentially lower overall interest costs compared to variable rates if rates increase.
- Peace of mind knowing your rate is locked in for five years.
Cons
- Less flexibility if you want to pay off the mortgage early due to penalties.
- Missed opportunities for lower rates if market rates decrease.
- Typically higher initial rates compared to variable mortgages.
- Limited access to home equity until the mortgage is paid off.
With the prime rate hovering around 7.20% in 2026, now is an ideal time for Canadians to compare fixed and variable mortgage options. Understanding the differences can help you save money and make an informed decision on your home financing.
Key Features
- Fixed mortgage rates typically range from 5.00% to 6.50% for a 5-year term.
- Variable mortgage rates are often lower, starting around 4.80% but can fluctuate with the prime rate.
- Fixed mortgages provide stability in monthly payments over the term.
- Variable mortgages can lead to lower overall interest costs if rates decrease.
- Potential welcome bonuses of up to $3,000 for new customers, depending on the lender.
- Standard mortgage terms usually range from 1 to 10 years, with 5 years being the most common.
Pros & Cons
- Pros:
- Predictable payments with fixed mortgages.
- Lower initial rates with variable mortgages.
- Flexibility in repayment options.
- Potential for savings if the prime rate decreases.
- Cons:
- Fixed rates may be higher than current variable rates.
- Variable rates can increase unexpectedly.
- Early repayment penalties may apply for both options.
- Limited options for refinancing during the term.
How It Compares
| Product | Type | Rate | Term |
|---|---|---|---|
| Big Bank Fixed Mortgage | Fixed | 6.25% | 5 Years |
| Credit Union Variable Mortgage | Variable | 4.95% | 5 Years |
| Online Lender Fixed Mortgage | Fixed | 5.75% | 5 Years |
Who It's For
This comparison is beneficial for first-time homebuyers, investors, or those looking to refinance their current mortgage. In British Columbia, where housing prices are high, a fixed-rate mortgage may provide needed stability, while in Ontario, where market fluctuations are common, a variable-rate mortgage could be advantageous.
How to Apply
Applying for a mortgage is straightforward. Follow these steps:
- Gather your financial documents (income proof, credit report).
- Shop around and compare rates from various lenders.
- Submit your application with the chosen lender.
- Review and sign the mortgage agreement once approved.
FAQ
Can newcomers get it?
Yes, newcomers can apply for mortgages in Canada, but they may need a higher down payment and proof of income.
What credit score do I need?
A minimum credit score of 620 is typically required for most lenders, but higher scores may provide better rates.
What happens if I want to pay off my mortgage early?
Early repayment penalties may apply; check your mortgage agreement for specific terms.
Can I switch from a variable to a fixed mortgage?
Yes, many lenders allow you to switch, but it may involve fees or penalties.
What are the typical down payment requirements?
For mortgages under $1 million, the minimum down payment is 5% of the purchase price; above this, it is 20%.
Not financial advice. Rates and offers change. Read provider terms.
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Compare & Apply →Our Methodology
BGR evaluates Canadian mortgage products using a 6-factor model based on CMHC and FCAC guidelines, updated quarterly.
Data sources: FCAC, CMHC, issuer websites, Equifax Canada, TransUnion Canada. Last audit: June 2026.