Fixed Rate vs Variable Rate Mortgages – What’s the Right Choice?
- Wayne Hillier
- 2 days ago
- 3 min read
Updated: 1 day ago
By Wayne Hillier, Real Estate Investing Masters
May 28, 2025 | Edmonton, Alberta
As real estate investors, we’re constantly faced with decisions that can impact the long-term health of our portfolios. One of the most important and most misunderstood is the choice between fixed and variable rate mortgages.
To help clarify this topic, we invited mortgage strategist Keaton Kirkwood to join us for a candid, in-depth discussion. Keaton, a long-time investor-focused mortgage broker and co-founder of Kirkwood & Brennan Mortgage Group, brought real clarity to the conversation.
“It’s not about predicting rates, it’s about choosing the product that aligns with your goals and gives you control,” Keaton said. “You can’t drive by looking in the rearview mirror.”
Why Fixed vs Variable Isn’t Just About the Rate
Most people focus only on the number. But Keaton emphasized that there’s far more to this decision than just comparing interest percentages.
A fixed-rate mortgage offers predictability but comes with potentially massive penalties if you need to break the mortgage early. Many borrowers are unaware that these penalties, known as IRDs (Interest Rate Differentials), vary widely between lenders and can amount to tens of thousands of dollars.
“We’ve seen fixed-rate penalties over $100,000,” Keaton noted. “The banks can manipulate posted rates in real time, which directly impacts how your penalty is calculated. It’s perfectly legal, but most people don’t know it’s happening.”
A variable-rate mortgage, on the other hand, often includes more flexibility. If structured properly, you can lock into a fixed rate later without penalty, and your payout cost is usually capped at three months’ interest. This can be a strategic option in uncertain economic times especially if you’re planning to refinance, sell, or reposition the property within a few years.
Aligning Strategy with Structure
What makes Keaton’s approach unique is that he doesn’t just plug numbers into a calculator. He takes the time to understand the bigger picture of his clients’ portfolios and investing strategies.
Are you planning to refinance in 12–18 months?
Is this a BRRRR project that you’ll want to pull equity from?
Are you looking to hold long-term and minimize risk?
Each of these questions affects what mortgage product will support your success. And that’s the kind of conversation most borrowers never get from a bank or branch advisor.
Keaton explained that good investor-focused brokers don’t just find the best rate, they build the right plan.
What Investors Need to Watch For
A few key lessons from Keaton’s insights:
Ask about the IRD formula before signing a fixed-rate mortgage. Not all lenders are equal.
Know whether you’re getting a “true” variable (with fixed payments and optional conversion) or an adjustable rate (where payments fluctuate).
Don’t assume your bank is giving advice in your best interest. Unlike mortgage brokers, they’re not legally required to.
As Keaton put it, “Most people don’t realize their lender’s job is to legally extract as much money as possible from them over the life of the mortgage.”
It’s not about paranoia, it’s about protecting your downside and knowing the rules of the game.
Real Estate Success Starts with the Right Financing
Whether you’re a new investor or managing a multi-property portfolio, your financing choices can make or break your long-term results. And in today’s rate environment, it’s not enough to guess, you need to understand.
That’s what makes Keaton’s guidance so valuable. If you’re not already working with an investor-focused mortgage broker, make it your next move.
Need help with mortgage planning?
Keaton Kirkwood and his team at Kirkwood & Brennan Mortgage Group specialize in working with real estate investors across Canada. Visit kbmortgages.ca to get started.
Listen to Today’s Episode:
Real Estate Investing Morning Show – Hosted by Wayne & Gabby Hillier
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