Your definitely going to want to get out of your current mortgage for sure. Many are looking at converting to fixed rate mortgages, and if ever there was a time to do so, now is the time. Given your situation, the lowest 5 year fixed is 3.39%. If I factor in a penalty of $3,200, which should be fairly close (including discharge fee), you'll save $2,548.95 with 3.39% vs. the 3.75% your current lender is offering you.
If you wanted to go into another variable, there is prime -1.24% available (2.71%). We would need to see 3 more increases to prime rate for it to move ahead of the 3.39%. The Bank of Canada is hoping to increase prime rate two more times next year. If the economy continues at it's current pace, then this will become reality... and it could continue to increase further from there. If you are at all concerned about rising rates, then a fixed rate is a good solid option that you can not go wrong with it. Why do I say that? Because it gives you a solid peace of mind knowing that you're protected. Variable may still end up being the better long term choice, but if you're going to feel anxiety about increasing rates, then fixed would be the best choice if thats what allows you to sleep soundly at night.
Mortgage Broker, Author
CityCan Financial Corp (lic. 10532)