At a constant 4.90% fixed rate and 5.30% variable rate, C$450,000 over 25 years starts near C$2,592 versus C$2,710 monthly. Renewal rates and the lender's written break-penalty formula decide the real cost.
Adjust the variables below to simulate outcomes, compare rates, and see real-time projections.
A direct comparison of features, rules, limits, and eligibility requirements.
| Feature / Detail | Fixed Rate Mortgage | Variable Rate Mortgage |
|---|---|---|
Payment stability | Frozen for the whole term, typically 5 years | Moves with prime (ARM), or stays flat while your amortization stretches (static-payment VRM) |
Penalty to break early | A closed fixed-rate contract often charges the higher of three months' interest and the lender's interest rate differential; ask for a written quote. | A closed variable contract commonly uses three months' interest, but the agreement controls; no universal C$6,000 cap exists. |
If rates fall | You keep paying the old rate until renewal | Your interest cost drops automatically with prime |
If rates rise | Nothing changes until renewal | ARM payments jump; static-payment VRMs risk hitting their trigger rate |
Compounding | Semi-annual, mandated by the federal Interest Act: slightly cheaper per point of rate | Typically monthly off prime |
Renewal reality (2026) | Since 21 November 2024, OSFI has not prescribed its minimum qualifying rate for an eligible uninsured straight switch at renewal. | The same OSFI treatment applies to an eligible straight switch; the new lender still assesses repayment capacity. |
Analyze the advantages and drawbacks of each financial product before making a decision.
The calculator's start is an illustration, not a lender rate sheet. On C$450,000 amortized over 25 years, 4.90% fixed with Canadian semi-annual compounding is about C$2,592 a month. A 5.30% variable rate compounded monthly is about C$2,710 initially. That is a C$118 monthly cash-flow difference while both rates remain unchanged. Multiplying it by five years gives about C$7,080 of payment difference, but that is not the same as total interest difference because principal balances will also diverge. The live chart holds both rates constant through the full amortization; a five-year contract does not guarantee that path.
The Financial Consumer Agency of Canada's penalty guide says lenders commonly charge the higher of three months' interest or an interest rate differential on a closed mortgage and that the specific method varies. Consider a separate break-date example with C$450,000 still owing. Three months of interest at 5.30% is C$5,962.50. A simple IRD illustration with a 4.90% fixed rate, a comparable 3.40% rate and three years remaining is C$450,000 × 1.50% × 3, or C$20,250. Neither amount is an actual contract quote: a lender can use posted rates, a discount adjustment or a different formula. Ask it to calculate both offers using your real balance and date.
A variable mortgage is not automatically the cheapest exit. A fixed contract may have a modest penalty if comparable rates are higher or the remaining term is short. A variable contract may also have terms beyond a simple three-month estimate. Use this comparison to identify the documents to obtain: a payment schedule, the prepayment clause and a written break quote. That makes the exit risk a number tied to your contract instead of a national penalty claim.
Variable contracts can use adjustable payments or fixed payments with a changing amortization. In an adjustable-payment contract, a prime-rate move changes the monthly amount under the contract's rules. With a static payment, a rate rise directs more of each payment to interest and less to principal. If monthly interest eventually exceeds the payment, the borrower reaches a trigger point and may need to increase payments, make an extra payment or follow another remedy specified by the lender. Ask which type the offered contract uses rather than assuming a bank name always means one structure.
At an assumed C$450,000 balance, monthly interest at 5.30% is C$1,987.50. At 6.30% it is C$2,362.50. At 7.30% it is C$2,737.50. Against a fixed C$2,710 monthly payment, the final example falls C$27.50 short of the interest due before any principal can be repaid. The graph uses the original balance as a constant snapshot to isolate rate risk. A real balance usually falls over time, and the exact trigger rate changes with balance and the lender's compounding method.
The calculation does not forecast Bank of Canada decisions. It shows why a nominally stable payment need not mean a stable repayment schedule. Ask the lender for its current trigger-rate or trigger-point explanation and check each statement's principal reduction. If the balance stops falling, request the lender's options while there is time to compare them.
OSFI's 21 November 2024 backgrounder says it stopped prescribing a minimum qualifying rate for eligible uninsured straight switches at renewal. It did not wait until July 2026. The rule covers moving an existing uninsured loan from one federally regulated lender to another without increasing its amount or remaining contractual amortization. The distinction matters if you request new borrowing or extend the repayment schedule: those changes are not the same straight switch.
The rule also does not abolish underwriting. OSFI still expects the receiving lender to assess willingness and capacity to repay under its policies. A borrower can compare renewal offers, but no regulator promises approval, a better rate or an instant transfer. Discharge, appraisal and legal fees can matter alongside the mortgage rate. Ask the receiving lender which costs it pays and get the net offer in writing.
A renewal at the end of a contract is distinct from breaking the contract early. The penalty examples above concern early exit. At renewal, check the remaining balance and amortization, compare the effective rate and payment structure, then confirm whether the proposed move truly meets OSFI's straight-switch criteria. The lender's rate-hold period varies; a universal 120-day window or a guaranteed discount from the first renewal letter would be an unsupported claim.
At the page's illustrative C$450,000 principal and 25-year amortization, a 4.90% fixed quote gives an initial payment near C$2,592 and a 5.30% variable quote near C$2,710. The fixed payment is C$118 lower today under these entered rates, but neither rate is a verified current market offer or a 25-year forecast. If a sale or refinance during the contract is plausible, request written break-penalty estimates for both offers. FCAC says a closed fixed loan often uses the higher of three months' interest and the lender's interest rate differential; a variable loan's charge depends on its contract. The widget compares interest only if rates stay unchanged and excludes every break fee. Since 21 November 2024, an eligible uninsured straight switch at renewal is exempt from OSFI's prescribed minimum qualifying rate, although the new lender still underwrites the loan. This is a contract comparison, not a promise of a penalty cap or lender approval.
Tight-margin budgets that must survive the full term unchanged, first buyers at the edge of affordability, and anyone certain they will not move or refinance for 5 years.
A borrower able to absorb rising payments or a longer amortization who has checked that the quoted variable contract's exit terms fit a plausible move or refinance.
These links include relevant regulators and page-specific references. Worked examples and projections may also use stated assumptions:
