We have a ScotiaBank variable rate mortgage. The rate is Prime Minus 0.75% and is reviewed every 6 months.

I looked back at how unstable variable rate mortgages can be. We started with 3% on September 1, 2004

Rate Increase Date / Rate
January 1, 2006 – 3.5%
March 1, 2006 – 4.5%
September 1, 2006 – 5.25%

That’s a 1.75% jump in just one year. Principal & Interest payment have gone up from $640 at 3% on $135,237 to $797 at 5.25% on $127,573. We’re now paying $157/month or $1,884/year more, on a mortgage that’s $8,000 smaller.

The sting of this increase wasn’t bad due to the small mortgage size. We would definitely go with a fixed rate on a larger mortgage at this point. Variable rates are way too volatile and with a sizable mortgage the difference would be several hundred dollars by now.