Variable Rate Private Mortgages: Good or bad Idea?
August 28, 2025 | Posted by: Alex Vinarski
After recent prime rate hikes, many borrowers are afraid of variable rates. But for a short-term private mortgage, a variable rate can still be smart. Here’s why.
The Short-Term Nature is Key
Remember: private mortgages are typically 1-year solutions. You aren’t locking in for 25 years. The goal is to use this time to improve your finances and refinance to a better rate.
Will Rates Go Up? The Truth for All Private Mortgages
This is the most important point: If prime rates rise, all private mortgage rates will likely rise—whether you choose fixed or variable.
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A variable rate means your payments could change during your term if prime changes.
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A fixed rate protects you for your 1-year term. However, your new rate at renewal will almost certainly be higher if prime has gone up significantly.
Choosing fixed only delays the potential increase; it doesn’t prevent it for your next term.
The Unlikelyhood of Near-Future Prime Rate Increases
The consensus among economists is that the period of aggressive rate hikes is over. The Bank of Canada is now expected to hold or even decrease rates in the medium term.
The Bottom Line: It's About Your Comfort
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Choose Fixed for predictable payments and to sleep well at night, knowing your rate won’t change for one year.
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Consider Variable if can get lower rate than fixed rate, and you believe rates will stay stable.
The real risk isn't fixed or variable—it's not having an exit plan. Our job is to ensure you have a strategy to refinance out of the private mortgage within a year.
Unsure which is right for your situation? Let's talk strategy. Contact me today for a clear, honest consultation.
