The 20% Question: Should You Put More Down on Your Home or Keep Your Money Invested?

Tracy Head • September 4, 2026

One of the more interesting conversations I have with clients isn't always about which mortgage rate they should take.


Sometimes, the bigger question is: How much money should you actually put into your home?


For many Canadians, the answer seems obvious. If you have the money, put it into the house. A larger down payment means a smaller mortgage, lower monthly payments and less interest paid over time.


And there is certainly a lot to like about that approach.

But what if you also have a substantial investment portfolio that has been performing very well?


Is it always better to take money out of your investments and put it into your home?

Not necessarily.


A real-world example

I recently had a client situation that illustrates this perfectly.


The client purchased a home worth $900,000. He had enough available capital to put down 50 per cent, or $450,000.


Instead, he chose to put down 20 per cent — $180,000 — and keep the other $270,000 invested.


His reasoning was straightforward. His investment portfolio had averaged approximately 23 per cent annually over the previous three years, and he believed the potential long-term growth of keeping that money invested outweighed the benefit of putting another $270,000 into his home.


At first glance, the numbers certainly make the decision interesting.


But before anyone sees a 23 per cent return and thinks this is an easy decision, there is an important point to make.


A 23 per cent average annual return is an exceptional historical result. It is not a guaranteed return, nor should anyone assume that a portfolio will continue producing 23 per cent year after year.


Many investments and portfolios don't come close to that level of performance.


That's what makes this decision so personal.


The case for putting more money into the house is that there is something very satisfying about paying down a mortgage.


When you put an additional dollar into your home, you are reducing the amount you owe and, in turn, the amount of interest you will pay.


Unlike an investment return, the savings from paying down your mortgage are much more predictable.


Let's say, for example, your mortgage rate is 4 per cent.


Putting $100,000 against that mortgage effectively saves you the interest you would otherwise have paid on that $100,000, subject to how your mortgage is structured and how long you keep the debt.


A larger down payment can also mean:

  • A smaller mortgage balance.
  • Lower monthly payments.
  • Less interest paid over time.
  • More equity in your home from day one.
  • Less financial stress for people who prefer carrying less debt.


For someone who values certainty, paying down debt can be an excellent financial strategy.


There is also an important Canadian mortgage consideration: 20 per cent is a significant threshold. Generally, a down payment of less than 20 per cent requires mortgage loan insurance, while 20 per cent or more allows you to obtain a conventional mortgage.


Once you've reached that 20 per cent threshold, however, the conversation can become much more interesting.


The biggest advantage of keeping some money invested is liquidity and diversification.


Your home is an asset, but the money tied up in your home isn't particularly easy to access. If you put an additional $270,000 into the property, that money becomes home equity.


If you leave that $270,000 invested, it remains part of your financial portfolio and may continue to grow. Depending on the investments, you may also have the ability to access some of that capital if circumstances change.


In my client's example, $270,000 is a significant amount of money.


If that money were to earn 23 per cent in a particular year, the gain would be approximately $62,100.


Compare that with a 4 per cent mortgage.


A 4 per cent cost of borrowing on $270,000 would represent approximately $10,800 of interest in the first year, before considering how the mortgage balance changes through payments.


On the surface, that makes keeping the money invested look very attractive.


But there is an important catch.


Investment returns are not guaranteed.


The mortgage rate represents a cost you can calculate. Your investment return is uncertain.


Your portfolio could earn 23 per cent. It could earn 5 per cent. It could earn nothing. It could also lose money.

That's the trade-off.


Don't confuse a great three years with a guaranteed future

This is probably the most important point I'd make to anyone considering this strategy.

Past investment performance is not a promise of future performance.


My client's portfolio averaging approximately 23 per cent over three years is impressive. But three years is a relatively short period when you're making a decision that could affect your finances for decades.


Markets go through good periods and bad periods.


A portfolio that has performed exceptionally well can experience a significant downturn.


And unlike your mortgage payment, you can't count on your investment portfolio producing a specific return next year.


That's why I would never tell a client that keeping their money invested is automatically better than paying down their mortgage.

It isn't.


There is also something to be said for peace of mind.


Personal finance isn't just about spreadsheets.


Two people can look at exactly the same numbers and make completely different decisions — and both can be making perfectly reasonable choices.


One person may look at a $450,000 mortgage and think, "I want that debt as small as possible."


Another may look at the same mortgage and say, "I'm comfortable carrying the debt because I want to keep my investments working for me."


Neither person is necessarily wrong.


Your income, job stability, age, investment risk tolerance, tax situation, other debts, retirement plans and overall financial picture all matter.


And perhaps most importantly, your ability to tolerate risk matters.


If seeing your investment portfolio fall 25 per cent would cause you to panic and sell everything, keeping a large amount invested simply because it has performed well recently may not be the right strategy for you.


There is a middle ground

It doesn't have to be an all-or-nothing decision.


You don't necessarily have to put either 20 per cent or 50 per cent down.


You might choose 25, 30 or 35 per cent, for example, while keeping some money invested.


That can provide a balance between reducing mortgage debt and maintaining investment exposure.


The right answer depends on the individual.


For some people, the predictable benefit of reducing debt will be more valuable than the potential investment gains.


For others, particularly those with strong cash flow, a long investment horizon and a diversified portfolio, maintaining investments while carrying a larger mortgage may make more sense.


So, what's the right answer?


As a mortgage broker, my job is to help clients understand the mortgage side of the equation. I can show them how different down payments affect their mortgage amount, payments and borrowing costs.


But I don't believe there is one universal answer to the question of whether you should put 20 per cent down or 50 per cent down.


The client with the $900,000 home made a decision that made sense for his particular circumstances. He chose to put $180,000 down, keep approximately $270,000 invested and accept the investment risk that came with that decision.


His portfolio's approximately 23 per cent average return over the previous three years certainly makes the decision look good in hindsight.


But hindsight is a wonderful thing.


None of us knows what the next three years will look like.


The lesson isn't that you should keep your money invested because investments can outperform your mortgage.


The lesson is that your home equity and your investment portfolio are two different pieces of your overall financial picture and deciding how much to allocate to each deserves careful consideration.


A larger down payment can provide certainty, lower debt and peace of mind.


Keeping money invested can provide liquidity, diversification and the potential for greater long-term growth but with substantially more uncertainty.


There is no magic percentage that works for everyone.



Disclosure: I am a mortgage broker, not a financial planner or investment advisor. The investment example above is based on an individual client's historical experience and should not be interpreted as a forecast or recommendation. Investment returns vary, and not all investments or portfolios perform anywhere near this level. Before deciding whether to put more money into your home or keep it invested, you should speak with your own qualified financial advisor or financial planner to determine whether the strategy makes sense for your individual circumstances.


Sometimes the best mortgage decision isn't simply about getting the smallest mortgage possible.


It's about finding the balance between debt, investments, risk and peace of mind that works for you.

Tracy Head

Mortgage Broker

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By Tracy Head • October 15, 2026
When you’re buying a home or renewing your mortgage, choosing a lender is one of the biggest financial decisions you’ll make. Many Canadians start with their bank because it’s familiar. They may have their chequing account, savings, and credit cards all in one place. It seems like the natural place to get a mortgage, too. After years of helping clients find the right mortgage, I’ve learned that the best choice isn’t always the biggest bank. That’s why I often work with monoline lenders to help my clients find a mortgage that fits their needs. What Is a Monoline Lender? A monoline lender is a company that focuses mainly on mortgages. Unlike traditional banks, monoline lenders don’t offer everyday banking services such as chequing accounts, credit cards, or car loans. Instead, they focus on one main job: providing home financing. Many monoline lenders work through mortgage brokers rather than dealing directly with customers. This means I can compare their mortgage options with those of banks and other lenders to help find a suitable fit for each client. You may not recognize the name of a monoline lender, but that doesn’t mean it’s a small or risky operation. Many are well-established companies that serve homeowners across Canada. One of the biggest reasons I work with monoline lenders is their focus on mortgages. Because mortgages are their main business, they often offer competitive interest rates and mortgage features that can be very attractive to borrowers. Even a small difference in your interest rate can make a difference over time. But I always remind my clients that the lowest rate isn’t the only thing that matters. The mortgage also needs to work with their budget, plans, and comfort level. Here are some of the advantages I see when working with monoline lenders: 1. Competitive interest rates Monoline lenders often offer very competitive rates, sometimes lower than those offered by the big banks. This can help reduce borrowing costs over the life of a mortgage. 2. Mortgage terms that put borrowers first Some monoline lenders offer flexible mortgage features, including helpful options for making extra payments or paying off a mortgage early. Their prepayment rules and penalties can also be more favourable than those of some bank mortgages. However, every lender and mortgage product is different, so I always look at the details before making a recommendation. 3. A focus on mortgage service Since monoline lenders specialize in mortgages, their processes and support teams are built around home financing. As a mortgage broker, I work with their lending teams to help move applications forward and deal with questions along the way. 4. More choice for my clients I believe my job is to look beyond the name on the building. By working with different types of lenders, I can compare more options instead of limiting my clients to what one bank offers. That extra choice can be especially helpful for first-time buyers, families renewing their mortgages, and homeowners who want to make the most of their money. Of course, no lender is perfect, and monoline lenders are no exception. One difference is that you generally won’t have a branch to visit for your mortgage. You may need to contact the lender by phone, online, or through your mortgage broker. For people who prefer face-to-face service at their local bank, this can take some getting used to. You also won’t be able to keep your everyday banking and mortgage with the same monoline company. Some people prefer having everything in one place, and that convenience has value. Another important point is that mortgage features can vary widely. Some monoline mortgages have excellent prepayment options, while others may have limits or conditions. Penalties for breaking a mortgage early can also vary, especially with fixed-rate mortgages. That’s why I encourage clients to read the terms carefully and ask questions before signing. A low rate is only a good deal if the mortgage suits your needs. How Do Monoline Lenders Compare With Traditional Banks? Traditional banks have plenty to offer. They provide familiar service, a wide range of financial products, and the convenience of managing several accounts under one roof. Some also offer discounts or benefits when you combine your mortgage with other products. Monoline lenders, on the other hand, focus on mortgages and may offer better rates or more suitable mortgage terms for certain borrowers. Neither option is automatically better. The right choice depends on your financial situation, your plans, and the mortgage details. This is where working with a mortgage broker can make a real difference. We can compare options from different lenders, explain the differences in plain language, and help you understand what you’re agreeing to. My Advice: Look Beyond the Name After years in the mortgage business, I believe that choosing a mortgage should be about more than finding the lowest rate or going with a familiar name. It should be about finding a mortgage that gives you good value, fits your budget, and offers the flexibility you may need in the future. That’s why I often recommend monoline lenders. They give me more options to consider and can provide excellent mortgage solutions for many Canadian homeowners. Most importantly, I want my clients to feel informed and comfortable with their decision. A mortgage is a major commitment, and you deserve to understand your choices before making it. Whether your mortgage is with a major bank, a credit union, or a monoline lender, the goal remains the same: to help you find the right fit for your life, not simply the first option put in front of you. The best mortgage isn’t always the one with the most familiar name. It’s the one that works best for you.
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By Tracy Head • October 1, 2026
If there’s one mortgage question I’ve heard more times than almost any other, it’s this: “Should I take the variable rate or lock in the fixed?” And honestly, there isn’t a one-size-fits-all answer. Right now it’s a particularly interesting question. For example, a client today might be looking at a variable mortgage around 3.50%, while the comparable fixed-rate option for the same term is approximately 4.45%. That’s a difference of almost a full percentage point. On a $500,000 mortgage, that difference is significant. So why wouldn’t everyone simply take the variable? Because the mortgage decision isn’t really about choosing between two numbers. It’s about deciding how much interest-rate risk you’re comfortable carrying. The case for variable The biggest attraction of a variable mortgage is obvious: you’re starting with the lower rate. At 3.50% versus 4.45%, the variable borrower has a meaningful head start. And unlike a fixed mortgage, where you’re locked into the rate for the term, a variable mortgage moves with the lender’s prime rate. The Bank of Canada influences short-term rates through its policy rate, which in turn affects prime and therefore variable mortgage rates. That creates both an opportunity and a risk. If rates fall, a variable-rate borrower generally benefits relatively quickly. More of the mortgage payment can go toward principal, and the overall interest cost can decline. That’s one reason variable mortgages have historically attracted borrowers who are comfortable with some uncertainty. There’s another advantage that I think is sometimes overlooked: flexibility. Many variable mortgages can be converted into a fixed-rate mortgage during the term. But—and this is important—the exact rules depend on the lender and the mortgage product. For example, some lenders allow a borrower to convert to a fixed rate without a traditional break penalty, provided certain conditions are met. Many lenders say their variable mortgages can generally be converted to a fixed mortgage with a term equal to or longer than the remaining variable term. Other lenders have their own rules. So when I’m arranging a variable mortgage for a client, I don't just ask, “What's the variable rate?” I ask: “What are the conversion rules?” Because a variable mortgage with a good conversion option can be a very different product from one without it. But here's the catch with converting I often hear clients say: “I'll just take the variable now and lock into a fixed rate if rates start going up.” It sounds like the perfect strategy. Unfortunately, mortgage markets don't always make it that easy. The problem is that by the time everyone agrees that rates are going higher, fixed rates may already have moved. That's because variable and fixed mortgages are influenced by different benchmarks. Variable rates are primarily connected to prime and the Bank of Canada’s policy rate. Fixed mortgage rates, meanwhile, are heavily influenced by Government of Canada bond yields and market expectations about future inflation and interest rates. That means fixed rates can move before the Bank of Canada actually changes its overnight rate. So if you wait for the first Bank of Canada rate hike before deciding to convert, you may find that the fixed rate you wanted has already become more expensive. And there’s another consideration: when you convert, you don't necessarily get the same discounted fixed rate that a new mortgage client might be offered. The conversion rate is determined by the lender and the terms of your mortgage. In other words, the ability to convert is valuable, but it isn't a crystal ball. What does history tell us? This is where the conversation gets interesting. Over long periods of Canadian mortgage history, variable rates have frequently been below comparable fixed rates. The Bank of Canada's own research shows just how attractive variable mortgages became in the years leading up to 2022. In 2021 and early 2022, for example, variable mortgage rates were substantially below fixed rates, and variable mortgages represented roughly one-third of outstanding mortgage debt. But then came 2022. The Bank of Canada increased its policy rate rapidly in response to inflation. Variable mortgage rates followed. Suddenly, the borrower who had enjoyed a significant discount over a fixed mortgage was facing much higher payments. That experience is worth remembering because it illustrates the fundamental truth about variable mortgages: The historical advantage of variable isn't a guarantee. There have been periods when variable rates have outperformed fixed rates, and there have been periods when fixed rates have been the better choice. In fact, the recent history gives us a pretty good example of both sides. In 2021, a variable mortgage could be dramatically cheaper than a fixed mortgage. By late 2022 and into 2023, rapidly rising rates turned that relationship upside down. CMHC's historical data shows variable mortgage rates climbing sharply as the Bank of Canada increased its policy rate. Canada Mortgage and Housing Corporation More recently, the relationship has shifted back again. CMHC reports that variable mortgage rates at Canadian chartered banks fell below fixed mortgage rates beginning in the fourth quarter of 2025, marking the first time that had happened since 2022. By February 2026, variable mortgages had become the most common type of newly extended mortgage at chartered banks. That's an important piece of context for today's borrower. So does variable normally win? If you look at the broad historical picture, variable rates have often been lower than fixed rates over extended periods. But I would be very careful about turning that historical observation into a prediction. The reason is simple: we're not borrowing money in the past. We're borrowing it today. And today's starting point matters enormously. If I'm looking at a client with a 3.50% variable option and a 4.45% fixed option, the variable borrower has a 0.95 percentage-point advantage right from the start. The question becomes: How much can rates rise, and for how long, before that initial advantage disappears? That's the calculation I want clients to think about. If the variable rate remains around 3.50% for a while, the borrower has a considerable advantage. If it rises to 4.00%, perhaps the advantage is still there. If it rises to 4.50%, we've essentially eliminated the initial discount compared with today's 4.45% fixed rate. And if it rises substantially above that level and stays there, the fixed-rate borrower may ultimately come out ahead. Of course, that's a simplified illustration. Mortgage payments, amortization, timing and the path of rate changes all matter. But it demonstrates the basic concept. The variable borrower is effectively being paid to accept interest-rate risk. Right now, that payment is the roughly 0.95% discount. The question is whether that discount is enough compensation for the risk you're taking. The biggest mistake isn't choosing fixed. And it isn't choosing variable. It's choosing one without understanding your own tolerance for changing payments. I've had clients who could comfortably handle a payment increasing by several hundred dollars a month. For them, variable can be a reasonable way to pursue a lower starting rate and maintain some flexibility. I've also had clients for whom a $300 or $500 increase in their mortgage payment would create a serious problem. For those borrowers, the value of certainty can be much greater than the potential savings of starting with a lower variable rate. There's nothing wrong with paying a little more for certainty. Think about car insurance. You don't buy insurance because you expect to crash. You buy it because you don't want one bad event to create a financial disaster. A fixed mortgage provides a similar form of certainty. You're effectively saying, “I don't want to worry about where rates are going for the next several years.” That's worth something. There's also a psychological component This doesn't get talked about enough. A variable mortgage can look fantastic when rates are falling. It can look terrible when rates are rising. And human beings aren't particularly good at watching their biggest monthly expense change and then calmly sticking with a long-term strategy. We tend to do the opposite. When rates are low, people want to stay variable. When rates start rising, suddenly everyone wants fixed. And by then, the fixed rate may already have increased. I've seen this cycle repeat. That's why I don't believe the best mortgage strategy is necessarily the one that produces the lowest theoretical interest cost. The best strategy is one that the borrower can actually live with. What I tell my clients When the variable rate is around 3.50% and the comparable fixed rate is around 4.45%, I think it's reasonable to have a serious conversation about variable. That's a meaningful spread—not a tiny difference. But I also want the client to understand exactly what they're buying. They're buying a lower starting rate in exchange for accepting uncertainty. They're accepting that their rate can move. They're accepting that the Bank of Canada can move in a direction they don't like. And they're accepting that converting to fixed later isn't necessarily going to give them the same fixed rate that was available today. On the other hand, the fixed borrower is buying certainty. They know what their rate will be. They know what their mortgage payment will be, subject to the mortgage's specific terms. And they don't have to spend the next few years watching the Bank of Canada. So which one should you choose? After years in the mortgage business, I've learned that this is rarely a question of simply finding the mathematically “right” answer. It's about matching the mortgage to the borrower. If you have strong cash flow, plenty of financial flexibility, and can comfortably absorb higher payments if rates rise, a variable mortgage can be an attractive option—particularly when there's a substantial discount to the comparable fixed rate. If your budget is tight, you value certainty, or the prospect of a significant payment increase would cause financial stress, paying more for a fixed rate may provide valuable protection. And if you're considering variable, don't just ask your broker about the rate. Ask about the conversion rules, prepayment privileges, trigger rate, payment structure and exactly what happens if you decide to lock into a fixed mortgage later. Those details matter. Ultimately, the variable-versus-fixed debate isn't about predicting the Bank of Canada correctly. None of us has that ability. It's about deciding how much interest-rate risk you want to take, what you're being compensated for taking that risk, and whether you can comfortably live with the outcome if rates don't go the way you hope. That's a much more useful way to look at the decision. And in today's market, with roughly a 3.50% variable rate versus a 4.45% fixed rate, it's certainly a conversation worth having.  The historical and current-rate references above are based on Bank of Canada and CMHC data; lender conversion provisions vary by mortgage contract, so the column deliberately avoids presenting conversion as universally identical across lenders.