Compare the best variable closed mortgage rates for free.

Hoping to find a variable closed mortgage with no fees at all? That's not something you'll find with any lender in Canada. Every mortgage type comes with some combination of costs, and variable closed mortgages are no exception.

What sets variable closed mortgages apart is how simple the penalty structure is compared to their fixed-rate counterparts. But the standard closing costs still apply no matter which mortgage type you choose.

Most fees fall under your closing costs, which typically run between 1.5% and 4% of your home's purchase price. These usually include:

• Mortgage default insurance: Required if your down payment is under 20%, this insurance (from CMHC, Sagen, or Canada Guaranty) protects the lender if you default. Premiums are usually rolled into your monthly payments, though you can pay them upfront instead.
• Provincial sales tax (PST): Homebuyers in Ontario, Quebec, and Saskatchewan pay sales tax on their default insurance premium at closing.
• Interest adjustment costs: If your closing date falls mid-month, you may owe interest for the days before your first regular payment kicks in.
• Appraisal fee: Lenders typically require a home appraisal before approving your mortgage, and this cost usually falls on the buyer.

You'll also want to budget for other closing-related costs, like legal fees, land transfer tax, and property tax adjustments.

Prepayment penalties

Like other closed mortgages, breaking your term early or exceeding your prepayment privileges can trigger a penalty. The advantage of a variable closed mortgage is that this penalty is calculated using a much simpler formula than fixed-rate closed mortgages: three months' interest on your outstanding balance, full stop. There's no interest rate differential (IRD) to worry about, which is the calculation that can make breaking a fixed mortgage expensive.

Most variable closed mortgages also come with prepayment privileges that let you pay extra without penalty, often up to 10% to 20% of your original principal each year. These allowances vary by lender, so it's worth checking your specific contract.

While a completely fee-free variable closed mortgage isn't realistic, the predictable, lower-cost penalty structure is one of the main reasons borrowers choose this product over a fixed one.

LowestRates.ca can help you compare today's best variable closed mortgage rates from top lenders across Canada. Just use the mortgage quoter at the top of the page.

No single lender offers the best rate to every borrower. Variable rates move with the lender's prime rate, but the discount or premium you're offered relative to prime depends heavily on your own financial profile.

Lenders tend to offer their best rates to borrowers who:

• Have a total debt service ratio of 44% or less, and a gross debt service ratio of 39% or less
• Can pass the mortgage stress test
• Have a strong credit score
• Can put down a sizable down payment
• Have stable, verifiable income

Meeting these benchmarks widens the pool of lenders competing for your business, which usually means a better discount off prime.

It's also worth remembering that because your rate is tied to prime, it will move up or down over your term as the Bank of Canada adjusts its policy rate. So rather than asking "what's the best variable closed rate right now," it helps to also ask how much room you have in your budget if rates rise before your term is up.

Both can get you a competitive variable closed mortgage rate. Which one makes more sense for you comes down to more than just the rate on offer.

Brokers

Brokers work with multiple lenders at once, so they can shop your application around and compare discounts off prime on your behalf. They're usually paid by the lender rather than charging you directly, and their volume relationships can sometimes unlock a better discount than you'd get walking into a branch.

Banks

Going directly to a bank appeals to borrowers who value an existing relationship or brand familiarity. If you're already a customer, the bank may have quicker access to your financial history, which can speed up approval. Keep in mind banks only offer their own products, so comparing rates means checking multiple banks yourself. Banks also tend to have stricter approval criteria, which can be a hurdle for self-employed borrowers or those with less conventional income.

Finding the best mortgage product

Rather than committing to one path before seeing your options, compare rates from both banks and brokers side by side. LowestRates.ca lets you do exactly that, so you can find the variable closed mortgage that fits your needs.

The choice between variable and fixed comes down to your comfort with payment fluctuations and your read on where interest rates are headed.

With a variable closed mortgage, your rate moves with the lender's prime rate. Your payment amount may stay the same throughout your term, but the portion going toward interest versus principal shifts as prime changes, or, depending on your lender, your payment amount itself may adjust. This product tends to appeal to borrowers who believe rates are more likely to fall or stay flat over their term, and who have some flexibility in their budget to absorb rate increases if they're wrong.

With a fixed closed mortgage, your rate and payment stay the same for the entire term, which makes budgeting simpler and protects you if rates rise. The trade-off is a less forgiving penalty if you need to break the mortgage early, since fixed-rate penalties are typically calculated using the interest rate differential rather than a flat three months' interest.

Historically, variable rates have cost less over the long run than fixed rates, but that's not guaranteed for any individual term, and the potential for payment shock is real if rates move against you.

To see how variable closed mortgage rates stack up against fixed options, use LowestRates.ca to start comparing today.