Locking in a Variable Rate Mortgage

Rima Amaechi • July 20, 2023


If you have a variable rate mortgage and recent economic news has you thinking about locking into a fixed rate, here’s what you can expect will happen. You can expect to pay a higher interest rate over the remainder of your term, while you could end up paying a significantly higher mortgage penalty should you need to break your mortgage before the end of your term.


Now, each lender has a slightly different way that they handle the process of switching from a variable rate to a fixed rate. Still, it’s safe to say that regardless of which lender you’re with, you’ll end up paying more money in interest and potentially way more money down the line in mortgage penalties should you have to break your mortgage.


Interest rates on fixed rate mortgages


Fixed rate mortgages come with a higher interest rate than variable rate mortgages. If you’re a variable rate mortgage holder, this is one of the reasons you went variable in the first place; to secure the lower rate.


The perception is that fixed rates are somewhat “safe” while variable rates are “uncertain.”  And while it’s true that because the variable rate is tied to prime, it can increase (or decrease) within your term, there are controls in place to ensure that rates don’t take a roller coaster ride. The Bank of Canada has eight prescheduled rate announcements per year, where they rarely move more than 0.25% per announcement, making it impossible for your variable rate to double overnight.


Penalties on fixed rate mortgages


Each lender has a different way of calculating the cost to break a mortgage.  However, generally speaking, breaking a variable rate mortgage will cost roughly three months of interest or approximately 0.5% of the total mortgage balance. While breaking a fixed rate mortgage could cost upwards of 4% of the total mortgage balance should you need to break it early and you’re required to pay an interest rate differential penalty.


For example, on a $500k mortgage balance, the cost to break your variable rate would be roughly $2500, while the cost to break your fixed rate mortgage could be as high as $20,000, eight times more depending on the lender and how they calculate their interest rate differential penalty.


The flexibility of a variable rate mortgage vs the cost of breaking a fixed rate mortgage is likely another reason you went with a variable rate in the first place.


Breaking your mortgage contract


Did you know that almost 60% of Canadians will break their current mortgage at an average of 38 months? And while you might have the best intention of staying with your existing mortgage for the remainder of your term, sometimes life happens, you need to make a change.


Here’s is a list of potential reasons you might need to break your mortgage before the end of the term. Certainly worth reviewing before committing to a fixed rate mortgage. 


  • Sale of your property because of a job relocation.
  • Purchase of a new home.
  • Access equity from your home.
  • Refinance your home to pay off consumer debt.
  • Refinance your home to fund a new business.
  • Because you got married, you combine assets and want to live together in a new property.
  • Because you got divorced, you need to split up your assets and access the equity in your property
  • Because you or someone close to you got sick
  • Because you lost your job or because you got a new one
  • You want to remove someone from the title.
  • You want to pay off your mortgage before the maturity date.


Essentially, locking your variable rate mortgage into a fixed rate is choosing to voluntarily pay more interest to the lender while giving up some of the flexibility should you need to break your mortgage.


If you’d like to discuss this in greater detail, please connect anytime. It would be a pleasure to walk you through all your mortgage options and provide you with professional mortgage advice.

Rima Amaechi

Licensed Mortgage Broker

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Down Payment Options for Canadian Homebuyers

By Rima Amaechi • October 15, 2026
For most Canadians, the down payment is the biggest hurdle to homeownership. A down payment is the initial amount you contribute toward your property purchase, while the lender covers the rest through a mortgage. By law, Canadian lenders can only finance up to 95% of a property’s value, which means you’ll need at least 5% down to qualify. If you’re putting down less than 20%, your mortgage must be insured through one of Canada’s three default insurance providers— CMHC, Sagen (formerly Genworth), or Canada Guaranty . This insurance comes at a cost, but it can be rolled into your mortgage amount. The less you put down, the higher the premium. Since saving a down payment can feel overwhelming, it helps to know the different sources you can draw from. Here are the most common options available to Canadian homebuyers: 1. Savings & Personal Resources The most straightforward source is your own savings. Lenders will ask to see a 90-day history of the funds in your account. Any large deposits outside of regular payroll must be explained with documentation—such as the sale of a vehicle or a transfer from an investment account. This requirement isn’t just red tape; it’s part of Canada’s anti-money laundering rules. 2. Proceeds from the Sale of a Property If you’ve recently sold another home, you can use the proceeds as a down payment on your new purchase. Proof of the sale—such as the final statement of adjustments from your lawyer—will be required. 3. RRSP Home Buyers’ Plan (HBP) First-time buyers can withdraw up to $35,000 each (or $70,000 as a couple) from their RRSPs to put toward a down payment under the federal Home Buyers’ Plan . The funds are withdrawn tax-free, but they must be repaid over a 15-year period. This is a popular option for buyers who have been steadily contributing to their retirement savings. 4. Gifted Down Payment With today’s housing prices, many buyers turn to family for help. A parent or immediate family member can provide a gift that makes up part—or even all—of the required down payment. The lender will require a signed gift letter confirming that the money is a true gift (with no repayment expected) and proof that the funds have been deposited into your account. 5. Borrowed Down Payment In some cases, you may be able to borrow your down payment. This option is usually available only if you have strong credit and sufficient income. The payments on the borrowed funds are factored into your debt service ratios, so affordability is key. Lenders typically use 3% of the outstanding balance when calculating the additional payment. The Bottom Line A down payment doesn’t have to come from just one source—it can be a combination of savings, gifted funds, RRSPs, or other resources. What matters most is being able to show where the money came from and that it meets lender requirements. If you’d like to explore your options or learn how much you might qualify for, it’s never too early to start the conversation. Connect with us today—we’d be happy to help you create a plan and take the first steps toward homeownership.

Co-Signing a Mortgage in Canada: Pros, Cons & What to Expect

By Rima Amaechi • October 1, 2026
Co-Signing a Mortgage in Canada: Pros, Cons & What to Expect Thinking about co-signing a mortgage? On the surface, it might seem like a simple way to help someone you care about achieve homeownership. But before you sign on the dotted line, it’s important to understand exactly what co-signing means—for them and for you. You’re Fully Responsible When you co-sign, your name is on the mortgage—and that makes you just as responsible as the primary borrower. If payments are missed, the lender won’t only go after them; they’ll come after you too. Missed payments or default can damage your credit score and put your financial health at risk. That’s why trust is key. If you’re going to co-sign, make sure you have a clear picture of the borrower’s ability to manage payments—and consider monitoring the account to protect yourself. You’re Committed Until They Can Stand Alone Co-signing isn’t temporary by default. Even once the initial mortgage term ends, you won’t automatically be removed. The borrower has to re-qualify on their own, and only then can your name be taken off. If they don’t qualify, you stay on the mortgage for another term. Before agreeing, talk openly about expectations: How long might you be on the mortgage? What’s the plan for eventually removing you? Having these conversations upfront prevents surprises later. It Affects Your Own Borrowing Power When lenders calculate your debt service ratios, the co-signed mortgage counts as your debt—even if you never make a payment on it. This could reduce how much you’re able to borrow in the future, whether it’s for your own home, an investment property, or even refinancing. If you see another mortgage in your future, you’ll want to consider how co-signing could limit your options. The Upside: Helping Someone Get Ahead On the positive side, co-signing can be life-changing for the borrower. You could be helping a family member or friend buy their first home, start building equity, or take an important step forward financially. If handled with clear expectations and trust, it can be a meaningful way to support someone you care about. The Bottom Line Co-signing a mortgage comes with both risks and rewards. It’s not a decision to take lightly, but with careful planning, transparency, and professional advice, it can be done responsibly. If you’re considering co-signing—or want to explore safer alternatives—let’s connect. I’d be happy to walk you through what to expect and help you decide if it’s the right move for you.