TL;DR

The right fixed term is not the one with the flashiest headline rate. It is the one you can keep through likely life events without paying painful break costs.

What a fixed mortgage is

With a fixed mortgage, your interest rate is locked for the term. Your scheduled payment stays stable unless you change payment settings or prepay principal under your contract rules.

This product is strongest when budget reliability matters more than rate-cycle guessing.

Fixed strategy is usually about payment resilience first, not prediction accuracy.

How fixed compares with nearby alternatives

Option Main upside Main tradeoff Best fit
Fixed mortgage High payment certainty through the term Break penalties can be materially higher Households prioritizing budget stability
Variable mortgage Often lower starting rate and more flexibility Rate and payment behavior can change Borrowers with strong cash-flow buffer
Open or short-flex structures Lower break-friction in short timelines Usually higher carrying cost Borrowers likely to refinance, sell, or move soon

For side-by-side strategy analysis, use the fixed vs variable hub.

Who fixed is usually a good fit for

  • You want predictable payments for family planning, cash-flow control, or debt management.
  • You prefer sleep quality over rate speculation.
  • You expect to keep the mortgage through most or all of the selected term.
  • You value clear budgeting more than short-term rate optionality.

When fixed is usually a poor fit

  • You are likely to sell, refinance, or restructure inside the term window.
  • You are selecting term length without checking break-cost exposure.
  • You need maximum flexibility for uncertain work, location, or property plans.
  • You are deciding from one posted rate instead of total-cost scenarios.

True cost of certainty: what borrowers often miss

Fixed pricing is only one part of cost. You also need to score contract mechanics:

  • Prepayment privileges: annual lump-sum and payment-increase limits vary by lender.
  • Penalty method: many contracts use the greater of three months' interest or an IRD-style amount.
  • Portability and blend rules: moving or upsizing inside term changes the economics.
  • Hold period realism: if your timeline is uncertain, break-risk weighting should increase.

Break-penalty reality before you lock in

FCAC is explicit that prepayment penalties can be significant and lender formulas differ. Ask for written penalty methodology and sample calculations before commitment, not after.

Use this practical sequence: estimate break cost, compare against expected savings, then choose term length.

Mortgage planning desk with laptop chart, calculator, documents, and keys at sunset
Rate certainty is valuable only if the contract still works when life changes.

Decision traps that create expensive fixed outcomes

Mental model Common borrower mistake Pragmatic correction
Anchoring Choosing the first attractive fixed quote without scenario testing Run base, stress, and renewal cases before selecting term
Loss aversion Over-fearing variable volatility while ignoring fixed break-cost risk Quantify both risks in dollars, then compare
Status quo bias Auto-renewing into the first lender offer at maturity Start review 120 days before renewal with switch options ready
Mortgage advisor meeting with a couple at sunset to compare fixed mortgage affordability scenarios
Good fixed decisions come from written rules, not one-day rate emotion.

Your 10-day fixed-term decision sprint

  1. Calculate payment affordability and stress-test room.
  2. Estimate break risk using your realistic 12 to 36 month life plan.
  3. Compare 3-year and 5-year fixed paths against variable alternatives.
  4. Select the term that survives downside scenarios, then lock execution timelines.

Best next step

Sources