The best comparison starts with your budget and plans, not a prediction about the next rate announcement. Understand what can change during the term and what a change would mean for your household.
Separate the rate from the payment
A fixed mortgage keeps its interest rate for the agreed term. A variable rate can change during that term, often through a lender’s prime rate and the contract’s stated adjustment. The term is the contract period, not the full repayment schedule. FCAC explains mortgage interest types.
Variable mortgages also differ from one another. Some adjust the payment when rates change. Others initially keep the payment steady while changing the split between interest and principal. With a fixed-payment variable mortgage, rising interest can leave less principal being repaid and may lead to required changes under the contract. Ask about its trigger provisions rather than assuming the payment can never rise.
An original payment comparison
Consider $400,000 with 25 years remaining and monthly payments. To isolate the rate effect, both illustrations use a nominal annual rate compounded semi-annually:
| Illustrated rate | Monthly principal and interest |
|---|---|
| 4.50% | $2,213.89 |
| 5.50% | $2,441.57 |
The difference is about $228 a month. These are constant-rate payment illustrations, not a forecast or a description of every variable contract. A variable product’s compounding and payment rules must be entered correctly before comparing an actual offer. Taxes, insurance and condo costs are additional household expenses.
Choose a comfortable stress case
Try a higher-rate case before deciding that the starting payment is affordable. In this example, a household with only $150 of monthly surplus would not absorb the illustrated increase without another adjustment. A household with $600 of surplus has more room, but may still prefer a predictable payment.
Write down what would change first if expenses rose: discretionary spending, savings contributions, or essential payments. Avoid counting on a future raise or rental increase until it is realistic and supportable. Keep emergency savings separate from the down payment comparison.
Compare the contract as well as the rate
Fixed versus variable and open versus closed are separate choices. Open and closed contracts have different flexibility for early repayment. FCAC’s mortgage selection guide describes these features.
- Ask for the exact prepayment privileges and unused-privilege rules.
- Ask how an early payout would be calculated under each offer.
- If conversion to fixed is offered, ask which rate and term would apply.
- If moving is possible, obtain the portability conditions in writing.
Keep each answer beside the quoted rate. A small starting payment difference does not capture the cost of a future sale or refinance.
Build two comparable scenarios
Use the residential calculator with the same mortgage balance, amortization and property costs in each scenario. Change one assumption at a time. Review actual payments separately from qualifying payments, then compare the written offers with your broker. A modelled ratio is not a promise that either product will be approved.
Put the figures into a scenario
Use the appropriate assumptions, compare the results and save a summary for your file.
Open the Residential Calculator →Sources and review
References checked September 22, 2026. Examples are illustrative; confirm the lender, insurer and program requirements for your situation.