Choosing the right mortgage type is one of the most important decisions you’ll make when buying a home in Canada. The right option can save you thousands over the life of your loan — and the wrong one can cost you. At InBudget Mortgage, we simplify your choices so you feel confident at every step.
In this post, we break down the main types of mortgages in Canada, so you can decide what works best for your budget, lifestyle, and financial goals.
🔁 1. Fixed-Rate Mortgage
What It Is:
A fixed-rate mortgage means your interest rate and payments stay the same throughout the term (e.g., 1, 3, or 5 years).
Best For:
Buyers who want payment stability
Those locking in during low-rate periods
Pros:
✅ Predictable payments
✅ Easier budgeting
✅ Protection from interest rate hikes
Cons:
❌ Higher initial rate vs. variable
❌ Penalties for breaking early can be steep
🔄 2. Variable-Rate Mortgage
What It Is:
A variable-rate mortgage fluctuates with the Bank of Canada’s prime rate. Your payments may change as interest rates shift.
Best For:
Buyers comfortable with some risk
Those expecting rates to stay low or fall
Pros:
✅ Lower initial rates
✅ Potential for long-term savings
✅ Often lower penalties than fixed
Cons:
❌ Less predictability
❌ Harder to budget in volatile markets
🔓 3. Open Mortgage
What It Is:
An open mortgage allows you to repay the full amount at any time without penalty.
Best For:
Short-term homeowners
Those expecting a windfall (e.g., inheritance, bonus)
Pros:
✅ Full flexibility
✅ Ideal if planning to sell or refinance soon
Cons:
❌ Higher interest rate
❌ Shorter terms only (6 months to 1 year)
🔐 4. Closed Mortgage
What It Is:
A closed mortgage offers lower interest rates but limits your ability to pay it off early.
Best For:
Long-term homeowners
Buyers wanting the lowest possible rate
Pros:
✅ Lower rates
✅ Ideal for budget-conscious buyers
Cons:
❌ Prepayment penalties if broken early
❌ Less flexibility than open options
🏡 5. Conventional vs. High-Ratio Mortgages
Conventional Mortgage:
You put 20% or more down
No mortgage default insurance required
High-Ratio Mortgage:
Down payment is less than 20%
Requires CMHC or Sagen mortgage insurance
💡 InBudget Mortgage helps you understand your eligibility and the insurance costs involved.
💼 6. Other Mortgage Options in Canada
HELOC (Home Equity Line of Credit): Access flexible credit based on your home equity
Reverse Mortgage: For homeowners 55+ who want to convert equity into tax-free cash
Portable Mortgage: Transfer your current mortgage to a new property
Hybrid Mortgage: Combines fixed and variable terms under one agreement
🤝 How InBudget Mortgage Helps You Choose the Right Mortgage Type
Every buyer has different goals — and every mortgage type serves a different need. At InBudget Mortgage, we:
✅ Compare options from multiple lenders
✅ Help you match your mortgage to your budget and long-term goals
✅ Offer free pre-approvals and consultations
👉 Ready to find the right mortgage for you?
Book your free consultation with InBudget Mortgage today. Our expert team will walk you through your options and get you the best possible deal.