Fixed versus Variable

Tracy Head • September 9, 2024

One of the questions I am most often asked is “should I take a fixed or a variable rate”?

My answer to this question is different for each client.

My answer to this question may change based on the interest rate environment.

The last few years have been sobering to say the least. We were riding the high of historically low fixed interest rates and beginning to see them as the norm.

Where interest rates are sitting now (mid four to five per cent) is closer to the average interest rate Canadians have paid over the last twenty years.

This week I attended a learning event and the economist that presented to the group spoke the words we have all been waiting to hear. He did qualify his thoughts with the comment that no one has a crystal ball and we’ve all seen what can happen with Bank of Canada monetary policy.

What he did say is that he feels we will see prime rate drop 1.25 to 1.5 per cent over the next year.

What does that mean in dollars and cents?

As an example, if your mortgage is $500,000 and your variable rate mortgage is priced at prime less 1.05 per cent, if prime drops one per cent this means your payment will be $283.28 per month lower.

This math applies if your variable rate mortgage has a payment that changes every month. If your variable mortgage has a static payment (payment that does not change to follow changes in prime) your payment stays the same but more money goes towards the principal instead of interest.

So it seems like variable is the obvious choice if you are finalizing your mortgage right now.

But it may not be.

Circling back to where I said each client has a unique set of circumstances, variable may not be the best option.

Fixed rates for insured mortgages are hovering around 4.59 per cent (some lenders lower, some higher). For clients that are pushing to qualify for the maximum purchase price they can the one per cent difference between fixed and variable rates absolutely affects their borrowing power.

Lets say we are working with a family earning $120,000 annually. When we calculate their maximum purchase price using the minimum down payment and assuming $3,000 a year for property taxes here is the difference:

Using a fixed rate of 4.59 per cent we are looking at a purchase price of $525,000
Using a variable rate of prime less .95 per cent (5.49 per cent) we are looking at $475,000

Another consideration before choosing fixed or variable is individual risk tolerance. Do you have room in your budget if rates trend up instead of down that you will not be stressing if prime does increase?

Exit strategy is yet another thing to consider. With variable mortgages the maximum penalty you will pay if you pay your mortgage in full early is three months’ interest whereas with a fixed rate mortgage you will pay the greater of three months’ interest or your lender’s interest rate differential calculation. There can be quite a spread between the two.

If you are planning to pay off your mortgage in the next few years variable may be the route to go strictly for that reason.

And if you opt to choose a variable rate mortgage then decide you are not comfortable with potential changes, or if a few years in the fixed rates are far more attractive you can convert from a variable to a fixed rate mortgage. Win-win.

Deciding whether to go fixed or variable is absolutely an individual decision for all of the reasons above.

When the economist was asked whether he would choose a fixed or a variable mortgage himself right now there was no hesitation whatsoever.

“Variable all day long” was his answer.

It will be interesting to see where rates are a year from now.

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Tracy Head

Mortgage Broker

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So Your Mortgage Is Approved

By Tracy Head • March 6, 2026

So Your Mortgage Is Approved… Now Don’t Break It By the time a buyer gets the call that their mortgage has been approved, the reaction is usually somewhere between relief and a sudden urge to celebrate like they’ve just won the Stanley Cup. After weeks of paperwork, bank statements, document requests, and answering questions about that mysterious $73 e-transfer from your cousin, you’ve made it to the home stretch. But here’s the thing many buyers don’t realize: a mortgage approval isn’t the finish line. It’s more like the last lap before the ribbon. And in this final stretch, there are a few things that can still trip you up if you’re not careful. As a mortgage broker who has watched this happen more times than I care to admit, allow me to offer a friendly list of things you absolutely should not do between mortgage approval and possession day. 1. Do Not Finance a New Car (Even If It Smells Amazing) You might think, “What better way to celebrate a new house than with a new truck in the driveway?” The lender disagrees. Taking on new debt before your mortgage funds can change your debt ratios, which were carefully calculated to get you approved in the first place. I once had a client proudly tell me about the brand-new SUV they bought the week before closing. Unfortunately, the lender was less impressed. Celebrate later. The house comes first. The new car can wait. 2. Do Not Quit Your Job to ‘Follow Your Passion’ I’m a big supporter of people chasing their dreams. But if your dream involves leaving your stable salaried position to start a kombucha brewing company three days before your mortgage funds… perhaps give that dream a couple more weeks. Lenders like stability. A sudden career change can send underwriting departments into mild panic mode. 3. Do Not Open New Credit Cards for Furniture, Appliances, or “Just in Case” It’s very tempting. You walk into a furniture store, see the perfect sectional, and suddenly there’s a cheerful salesperson offering “12 months no payments!” It sounds harmless, but that new credit line can affect your credit score and your debt calculations. Also, you may be shocked to learn this: the house will still accept furniture purchases after you own it. 4. Do Not Move Money Around Like You’re Running an Offshore Hedge Fund During the mortgage process, lenders carefully verify where your down payment and funds are coming from. If large, unexplained deposits suddenly start bouncing between accounts, it can raise questions. Questions lead to paperwork. Paperwork leads to stress. Stress leads to calling your mortgage broker at 9:45 p.m. Keep things simple and predictable until the deal is done. 5. Do Not Co-Sign a Loan for Someone Else You may be the generous type. A friend or family member might ask you to co-sign for a car or a line of credit. As noble as that is, lenders will treat that new obligation as your debt too. Even if your cousin promises they’ll “definitely make the payments.” Your lender prefers promises backed by math. 6. Do Not Miss Any Bill Payments Your credit report was likely pulled during the approval process, and lenders sometimes check again before funding the mortgage. A missed payment can ding your credit score at the worst possible moment. In other words, now is the time to be the most financially responsible version of yourself. The Bottom Line Once your mortgage is approved, the best strategy is surprisingly simple: keep everything exactly the same until your home officially closes. Same job. Same credit habits. Same bank accounts. Think of it like carrying a tray of drinks across a crowded room. You’re almost there—now is not the time to start dancing. The good news? Once the keys are in your hand and the deal is finalized, you’re free to celebrate however you like. Buy the couch. Paint the walls. Host the housewarming party. Just maybe hold off on the kombucha startup for a week or two.

Reverse Mortgage follow up

By Tracy Head • February 23, 2026

Not long after my last column about reverse mortgages went live I received a thoughtfully written email from a reader challenging several of the points I made in my article. He raised concerns about the cons around reverse mortgages and said he felt that I wasn’t diving into the potential negative impacts of reverse mortgage products. Most of the concerns boiled down to the erosion of equity in seniors’ most significant asset due to the compounding of interest over time. He felt that I didn’t show any calculations so people would not see the long-term cost of a reverse mortgage. When I work with my reverse mortgage clients I show them projections that include the interest cost. What people may not consider is the appreciation in value of homes over time. Reverse mortgage lenders don’t automatically go to the maximum allowable amount for every client (ie: “up to 55% of the value of the home”). Mortgage size is determined by the age of the client and the type and location of the home that they are in so as not to erode all of the equity in the home. Mortgages are done on a sliding scale so the younger they are the less equity clients have access to. The other piece to understand is that not every client pulls the entire amount they are approved for upfront. I encourage my clients to only pull what they require at the time and to have the rest available for if and when they need it. Initially I was not a huge fan of reverse mortgages for a lot of the reasons that he shared. However, I have many clients who are house rich with very limited income. People living on CPP and OAS can’t afford the basic necessities never mind any frills. Which leads to another reason I see the value in reverse mortgages. Many of the clients I work with have overextended themselves using credit cards or personal lines of credit and are in the position that they are making the minimum payment on their credit facilities by applying for more credit cards or loans, which leads to a spiral of increasing balances month over month with no way to repay these debts. Downsizing doesn’t always work because moving to a smaller home often means now they have a strata payment. Even if they downsize and have cash in the bank to cover living expenses, the end result is that they are still eroding that equity and now are not in the home they spent their lives in. I’ve seen reverse mortgages impact seniors in positive ways that you can’t even imagine. I’ve had clients supporting their middle-aged children while not having money to buy groceries. I’ve worked with clients who have needed to renovate their homes for accessibility issues due to health concerns as they age. I’ve seen clients leverage the equity in their homes to buy vacation homes. There are many types of clients who use reverse mortgages to achieve their financial goals. I do find that some of the loudest objections come from the families of clients. In these situations I first ask my clients if their families know the true extent of their financial distress. Next I ask if they would like to include trusted family members in the conversation so that we can address any concerns so that everyone is on the same page. Not all reverse mortgage clients are naïve. Many have already done their homework before they call.