Variable VS Fixed Rate Mortgage

by Daj

RBC's 5 year fixed rate mortgage is 4.19%.

Their 5 year closed variable rate mortgage is prime (2.25%) plus 0.0%.

Their 5 year open variable rate mortgage is prime (2.25%) plus 0.7%.

Is there any reason not to opt for the 5 year closed variable rate?

By the way, your website is beautifully organized and easy to navigate. Dividing your information into bite sized pieces works extremely well. Thanks for making real estate transactions comprehensible.

Comments for Variable VS Fixed Rate Mortgage

Click here to add your own comments

Jan 08, 2010
Varible Vs Fixed
by: Anonymous

It comes down to which one is a better rate.
If you use the 5 year fixed rate, then you should not break the term, because it's not a good idea to pay penalty. I am not sure what is the penalty fee (mention that I should check it out).

5 year variable open sounds good to me, because I can take advantage of the low rate at the moment. Yes, the rate will go up later, but I also can lock it at any point. But one thing to notice is, say after 1 year the rate looks higher, and I feel like to lock it down, then I need to find out the policy to lock it. Must I lock for a 5 year fixed rate, or a 4 year fixed rate?

I hope it helps.

Dec 19, 2009
Re: Open Versus Closed Variable Rate Mortgages by RBC
by: Tom Karadza

Hi Daj,

Thanks for the feedback, much appreciated!

The 5 year closed is obviously the better rate as you mention.

However, make sure you're planning long term. If you ever have to break that 5 year mortgage you'll pay a penalty. Ask what that penalty will be so that you're prepared.

A few years ago I had to break a 5 year closed mortgage and paying the penalty wasn't fun.

So that would be my number one concern. If that's not an issue for you then the lower rate will likely save you thousands.

Hope that helps!


Click here to add your own comments

Join in and write your own page! It's easy to do. How? Simply click here to return to Submit A Question.


  Some Cool Free Stuff...

  Step 1:

Grab a free digital copy of our real estate investing book, Income  For Life For Canadians, right here. This book has been downloaded over 22,597 times and has helped hundreds of investors kick-start their investing with simple and straight forward strategies that you can implement right here in Canada.

You'll also receive our weekly [Your Life. Your Terms.] email newsletter with the latest investing updates and videos.

  Step 2:

Free Weekly Investing Videos & Articles: Get the latest updates and join the over 10,000 other Canadians enjoying the weekly [Your Life. Your Terms.] email newsletter. The email is sent out each Thursday. And as a little bonus we'll give a FREE digital copy of the book, Income For Life For Canadians, too!

Your Life. Your Terms.

  Step 3:

Free LIVE Investing Class: Do you live in the Greater Toronto or Golden Horseshoe Area? Come out to our next introductory "Investing in Nice Homes in Nice Areas" Real Estate Class.

Get all the details by clicking here.

It's 90-minutes and you'll learn a ton - promise!Thousands of investors have now joined us for this class and the feedback has always been amazing.

Click here to get book

This book has been downloaded over 22,597 times and has helped hundreds of investors kick-start their investing with simple and straight forward strategies that you can implement right here in Canada.

  Click here to subscribe