Is a fixed-rate mortgage better than variable?

Neither is universally better. Fixed offers payment certainty and protection from rising rates, while variable can cost less if rates fall. The right choice depends on your budget and tolerance for rate risk.

Does my payment ever change on a fixed mortgage?

Your principal-and-interest payment stays the same for the whole term. Amounts like property tax collected with your payment can change, but the core mortgage payment does not.

What happens at the end of a fixed term?

You renew the remaining balance at the rates available at that time. You can choose another fixed term, switch to variable, or, if you qualify, move to a different lender.

Mortgage Glossary

What is Fixed-Rate Mortgage?

A fixed-rate mortgage is a home loan whose interest rate stays the same for the entire term, so your payment of principal and interest does not change. In Canada, fixed terms commonly run from one to five years (sometimes longer), after which you renew at the rate available at that time.

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Quick answer

Also known as: fixed mortgage, fixed rate

Key points

The interest rate is locked for the full term, so payments stay constant.
Canadian fixed terms commonly range from one to five years, with renewal at the end.
Fixed rates are often slightly higher than variable rates at the start.
Breaking a fixed mortgage early can trigger an interest rate differential penalty.
Best suited to borrowers who prioritize payment certainty over potential savings.

Fixed-Rate Mortgage explained

With a fixed-rate mortgage, the lender locks your interest rate for the length of your term. Because the rate is set, both your interest charge and your regular payment stay predictable, regardless of what happens to the prime rate or the broader market during the term.

This stability is the main appeal. The trade-off is that fixed rates are often priced a little higher than variable rates at the outset, and breaking a fixed mortgage early can trigger an interest rate differential penalty, which is often larger than the penalty on a variable mortgage.

What a Fixed-Rate Mortgage is for

A fixed-rate mortgage is for borrowers who value certainty and want to budget without worrying about rising rates. It removes interest-rate risk for the duration of the term, which suits first-time buyers and anyone with a tight monthly budget.

How it can help you

Knowing your payment will not move makes household budgeting easier and protects you if rates climb. To make sure a fixed rate is actually competitive, Lenderoo lets you shop 40+ lenders for free so you can compare fixed offers side by side.

When it comes up

A family expecting their costs to rise over the next few years chooses a five-year fixed mortgage. They lock in a known rate, so even if market rates increase sharply, their payment stays the same until renewal, giving them room to plan around childcare and other expenses.

Example: a five-year fixed term

You take a $400,000 mortgage on a five-year fixed term with a 25-year amortization. Your principal-and-interest payment is set when you sign and stays identical for all 60 months of the term.

Even if market rates jump during those five years, your payment does not change. At the end of the term you renew the remaining balance at whatever rates are then available, and you can lock in a new fixed rate again or switch to variable.

Have a question about fixed-rate mortgage?

Lenderoo shops 40+ lenders for free and matches you with a mortgage professional who explains every term — and finds your best rate.

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Questions & answers

Fixed-Rate Mortgage: frequently asked questions

Common questions Canadians ask about fixed-rate mortgage.

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Related mortgage terms

Variable-Rate Mortgage

A mortgage whose interest rate moves up or down with the lender's prime rate over the term.

Read definition

Interest Rate

The cost of borrowing money, expressed as a percentage of the loan amount.

Read definition

Term

The length of time your current mortgage contract, rate, and conditions stay in effect before you must renew.

Read definition

Renewal

Renegotiating your mortgage terms at the end of a term.

Read definition

Prepayment Penalty

Fee charged for paying off a mortgage early.

Read definition

Back to full glossary

Understand your mortgage with confidence

Lenderoo shops 40+ lenders for free and pairs you with a mortgage professional who keeps the jargon simple — and gets you a great rate.

Find my best mortgage Explore the glossary

Mortgage Glossary

What is Fixed-Rate Mortgage?

Find my best mortgage Back to glossary

Quick answer

Also known as: fixed mortgage, fixed rate

Key points

The interest rate is locked for the full term, so payments stay constant.
Canadian fixed terms commonly range from one to five years, with renewal at the end.
Fixed rates are often slightly higher than variable rates at the start.
Breaking a fixed mortgage early can trigger an interest rate differential penalty.
Best suited to borrowers who prioritize payment certainty over potential savings.

Fixed-Rate Mortgage explained

What a Fixed-Rate Mortgage is for

How it can help you

When it comes up

Example: a five-year fixed term

You take a $400,000 mortgage on a five-year fixed term with a 25-year amortization. Your principal-and-interest payment is set when you sign and stays identical for all 60 months of the term.

Have a question about fixed-rate mortgage?

Lenderoo shops 40+ lenders for free and matches you with a mortgage professional who explains every term — and finds your best rate.

Get pre-approved free Talk to an expert

Questions & answers

Fixed-Rate Mortgage: frequently asked questions

Common questions Canadians ask about fixed-rate mortgage.

Keep learning

Back to full glossary

Understand your mortgage with confidence

Lenderoo shops 40+ lenders for free and pairs you with a mortgage professional who keeps the jargon simple — and gets you a great rate.

Find my best mortgage Explore the glossary