Variable Mortgages vs. Fixed Mortgages

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July 19, 2022

When it comes to mortgages, choosing between a variable or fixed option is one of the most important decisions a borrower will make. While both options have their pros and cons, it is crucial to consider every detail before making a final choice as there can be thousands of dollars of difference in interest payments over the term. As a leading provider of complete lending solutions for residential and commercial mortgages, the team at PHL Capital Corp. knows how difficult it can be to determine which option is best for your needs. That is why we have compiled some information to compare variable mortgages vs. fixed mortgages and help you determine which is right for you.

Read our tips for first-time home buyers.

Variable-Rate Mortgages

With a variable-rate mortgage, your mortgage payment will stay the same throughout your mortgage term, but the interest rate can go up or down depending on the prime rate.


Typical benefits of variable rate mortgages include:

  • The initial interest rate is often lower than a fixed-rate mortgage.
  • If the prime rate falls and your interest rate falls accordingly, more of your payments will go towards the principal, allowing you to pay off your mortgage faster.
  • You can convert to a fixed-rate mortgage at any time, giving you flexibility based on your changing situation and preferences.

Potential Concerns

Potential concerns or drawbacks of variable mortgages include:

  • If the prime rate rises and your interest rate goes up accordingly, less of your payments will go towards the principal, potentially extending the amortization period.
  • There will always be some uncertainty and unpredictability involved depending on economic trends, inflation, the housing market, and prime rates.

Fixed-Rate Mortgages

With a fixed-rate mortgage, the interest rate and your mortgage payments will remain the same throughout your term.


Typical benefits of fixed-rate mortgages include:

  • Since the interest rate stays the same, you will know exactly how much of the principal amount is remaining at the end of your term.
  • The terms of a fixed-rate mortgage are typically easier to understand than a variable-rate mortgage.
  • You are protected from drastic prime rate increases.

Potential Concerns

Potential concerns or drawbacks of fixed-rate mortgages include:

  • Interest rates are often higher than a variable-rate mortgage.
  • You are locked into your interest rate for the duration of the term, meaning that you may end up paying more than you would if you had a variable mortgage and the prime rate dropped.
  • If you break your mortgage for any reason, the financial penalties will likely be greater than a variable-rate mortgage.

To learn more about our lending solutions, get in touch with the mortgage lending team at PHL Capital Corp. We can be reached by phone at 604-579-0847 and will be happy to answer any questions you may have regarding mortgages or our application process.