If penalty is the obstacle to refinance, what is the difference between fixed rate mortgage to variable rate mortgage?

Penalty size would be the main criteria as to whether you’ll move out of your mortgage and refinance or stay with the current contract until your term is done and your mortgage is up for renewal. With a fixed rate mortgage your penalty may be 8 times (!) bigger than the variable rate mortgage. It’s a huge difference that may void all the advantages in refinancing. There are ways to lower your penalty. Again, its all about the way your initial mortgage has been structured.