If you are buying a home in London, Ontario, you will hear two words over and over: fixed and variable. They describe the two main kinds of mortgages. Here is what each one means, in plain words, so you can choose with confidence.
First, what is a mortgage rate?
A mortgage is the loan you use to buy a home. The rate is the extra cost of borrowing that money, shown as a percentage. A small change in the rate changes your monthly payment, so it is worth understanding before you sign anything.
What is a variable mortgage?
With a variable mortgage, your rate can move up or down during your term. It follows the Bank of Canada's main rate, called the policy rate. In simple terms, that is the rate banks charge each other for short term loans, and it sets the "prime rate" banks use to price variable loans for people like you.
When the Bank of Canada raises its rate, variable mortgage rates usually go up too. When it lowers its rate, variable rates usually come down. Your payment can change, or the part of your payment that goes to interest can change, depending on your contract.
The upside: if rates fall, you pay less. The trade off: if rates rise, your payment can rise too, and you need room in your budget for that.
What is a fixed mortgage?
With a fixed mortgage, your rate is locked for a set time, often 5 years. Your payment stays the same for that whole period, no matter what the Bank of Canada does.
The upside: your payment is predictable, which helps many first time buyers sleep better. The trade off: if rates fall, your payment does not fall with them. And if you need to break the mortgage early, for example to move or sell, the penalty can be large, so ask about that cost before you sign.
Which one fits you? Ask yourself these questions
Do I sleep better knowing my payment will not change? If yes, fixed may suit you.
2. Can my budget handle a payment that goes up sometimes? If yes, variable may be worth considering.
3. Might I move or sell before the term ends? If yes, ask about the penalty for breaking a fixed mortgage.
4. How long do I plan to stay in this home? A longer stay can make a fixed term easier to plan around.
There is no right answer for everyone. The right answer depends on your budget, your plans, and how much change you can handle.
What is happening in London right now?
You do not have to rush this decision. In September 2026, the London and St. Thomas Association of Realtors (LSTAR) reported 5.9 months of inventory across the region, which means there are enough homes for sale that buyers have time to compare. Homes in the City of London sold for a median price of $537,000, and across the region homes sold for about 97% of their asking price. In plain words, buyers have choices, and sellers are pricing close to what homes actually sell for.
The Bank of Canada announces its rate decision today, Wednesday, October 28, 2026. Whatever it decides, the guide above still applies: fixed means steady, variable means it moves.
What to do next
Before you choose, get a pre-approval. That is a lender's written estimate of how much you can borrow, based on your income, debts, and credit. Then talk to a mortgage broker or your bank and ask these three questions: What would my payment be with a fixed rate and with a variable rate? What happens to my payment if rates rise? What does it cost to break this mortgage early?
A good mortgage choice is not about guessing where rates go next. It is about picking the payment you can live with, in a home you love, in London, Ontario.
— Paola Cano & Jose Ramirez, Thrive Realty Group Inc., Brokerage, London, Ontario.