A fixed-rate mortgage is one of the most popular choices for Canadian homebuyers, and for good reason. It offers stability, predictability, and peace of mind—qualities that are essential in today’s fluctuating housing market. Whether you’re a first-time buyer or renewing your mortgage, understanding how fixed-rate mortgages work can help you make informed decisions and secure the best financing for your home.

In this guide, we’ll explain what a fixed-rate mortgage is, how it compares to other mortgage types, and how it can benefit you. We’ll also highlight how Homewise can simplify the mortgage process and help you secure the best rate for your needs.

1. What Is a Fixed-Rate Mortgage?

A fixed-rate mortgage is a home loan where the interest rate remains the same throughout the mortgage term. This means your monthly payments stay consistent, regardless of changes in market interest rates.

For example:

  • If you secure a fixed-rate mortgage at 5% for a 5-year term, your interest rate and monthly payments will not change for those 5 years.

2. How Fixed-Rate Mortgages Work

When you choose a fixed-rate mortgage, your payments cover:

  • Principal: The portion that reduces the amount you owe on the home.
  • Interest: The lender’s fee for borrowing money, which is calculated at the fixed rate you locked in.

Since the interest rate doesn’t change, more of your payment gradually goes toward the principal as time progresses. This predictability makes budgeting easier and shields you from market volatility.

3. Benefits of a Fixed-Rate Mortgage

a) Stability and Predictability

One of the biggest advantages of a fixed-rate mortgage is that it provides financial stability. You’ll know exactly how much your payments will be, allowing you to budget without surprises. This is particularly important in times of economic uncertainty.

💡 Looking to lock in a rate now? Start your pre-approval with Homewise today and secure a rate for up to 120 days.

b) Protection from Interest Rate Increases

If market interest rates rise during your term, your mortgage rate stays the same. This protects you from higher payments, providing peace of mind in a rising-rate environment.

c) Easy Budgeting

Fixed payments make it easier to plan your monthly expenses. This is especially helpful for first-time buyers managing their finances for the first time.

d) Long-Term Planning

If you plan to stay in your home for many years, a longer-term fixed-rate mortgage offers the assurance of steady payments over an extended period.

4. Fixed-Rate vs. Variable-Rate Mortgages

Choosing between a fixed-rate and variable-rate mortgage is a significant decision. Here’s a quick comparison:

Feature

Fixed-Rate Mortgage

Variable-Rate Mortgage

Interest Rate StabilityConstant for the termFluctuates with market rates
Monthly PaymentsConsistentCan change throughout the term
Protection from Rate HikesYesNo
Potential for SavingsLess if rates fallMore if rates drop
Best ForLong-term planning, risk-averse buyersShort-term plans, risk-tolerant buyers

For a deeper dive, check out our guide on Fixed vs. Variable Mortgages.

5. Who Should Choose a Fixed-Rate Mortgage?

A fixed-rate mortgage is ideal for:

  • First-time buyers looking for predictable payments.
  • Families on a budget who want to avoid the risk of rising rates.
  • Buyers planning to stay long-term in their home.
  • Anyone who prefers financial certainty over potential savings from fluctuating rates.

Not sure if fixed is right for you? Use our mortgage comparison tool to explore the best mortgage options for your unique needs.

6. How Long Should Your Fixed-Rate Term Be?

In Canada, fixed-rate mortgage terms typically range from 1 to 10 years, with 5 years being the most common. Choosing the right term length depends on your financial goals and market conditions.

  • Shorter Terms (1-3 years): Lower rates but less long-term security. Good if rates are expected to drop.
  • Longer Terms (5-10 years): Higher rates but long-term stability. Ideal if rates are expected to rise.

🏠 Pro Tip: If you're buying your first home, a 5-year fixed-rate term offers a good balance of stability and affordability.

7. How to Get the Best Fixed-Rate Mortgage in Canada

Here are some tips to secure the lowest fixed-rate mortgage:

  • Improve Your Credit Score: Lenders offer the best rates to borrowers with high credit scores.
  • Increase Your Down Payment: A larger down payment reduces lender risk and can qualify you for better rates.
  • Shop Around: Don’t settle for the first offer. Compare rates from multiple lenders.
  • Get Pre-Approved: Pre-approval locks in your rate and shows sellers you’re a serious buyer.

Apply for pre-approval with Homewise to start your mortgage journey today.

8. Fixed-Rate Mortgages and Refinancing

Fixed-rate mortgages aren’t just for new home purchases. If you already own a home, refinancing your mortgage at a fixed rate can:

  • Lock in lower interest rates.
  • Consolidate debt.
  • Free up cash for renovations.

Learn more about mortgage refinancing and how it can benefit you.

9. Partner With Homewise for Your Mortgage Needs

At Homewise, we simplify the mortgage process by connecting you with over 30 lenders to find the best fixed-rate options. Whether you're buying, refinancing, or renewing, our platform makes it easy to secure the best rate in minutes.

Explore our real estate listings to find your perfect home, and let Homewise handle the financing.

10. Conclusion

A fixed-rate mortgage offers stability, protection, and peace of mind, making it a great choice for many Canadian homebuyers. By locking in a rate and avoiding market fluctuations, you can confidently plan for the future.

Ready to get started? Begin your journey with Homewise’s simple online application today.