Variable rate mortgages in Canada are based on a set formula tied to the prime rate. For example, your variable rate might be Prime minus 1.0. As the prime rate changes, so will your mortgage rate. However, unlike adjustable rate mortgages, your payment will remain the same, but the amount of each payment going towards the principal versus the interest will change. If interest rates go down, more of your payment will go towards the principal, and if they go up, more will go towards the interest. It's important to understand the potential risks and benefits of a variable rate mortgage before choosing this option. While you may benefit from lower interest rates, there is also the possibility that rates could increase, leading to higher payments. Working with a mortgage broker can help you understand the options available and find a mortgage that fits your needs and financial situation.