Ottawa mortgage guide
By Nick Bachusky, Mortgage Agent Level 1 · Published July 10, 2026
I get this question every single week. Fixed or variable? It sounds like a simple choice. It is not.
The honest answer depends on you, and on one cost most people never think to ask about. The fixed vs variable mortgage Canada question comes down to two things. The rate you pay, and what it leaves you owing if you get out early.
Let me walk you through it in plain language, the same way I would on a call. If you want to jump ahead, you can also compare current Ottawa mortgage rates any time.
The short version
A fixed mortgage locks your rate and payment for the whole term. A variable mortgage moves with your lender's prime rate. Fixed gives you certainty for a small premium. Variable usually starts a little lower, but the rate can rise or fall while you hold it.
That is the whole idea in one breath. Fixed is a set price. Variable is a moving price tied to the market.
The comparison below lines up fixed vs variable mortgage rates side by side. Now you can see the trade-offs in one place.
Compare
Fixed
Variable
Rate behaviour
Locked for your whole term
Moves with your lender's prime rate
Your payment
The same every month
Can change when the Bank of Canada moves
Typical starting rate
Usually a little higher
Usually a little lower
Break penalty
Greater of three months' interest or the IRD
Usually about three months' interest
Who it suits
You want a set payment and no surprises
You can handle a swing and want flexibility
There is one more wrinkle worth knowing. A variable mortgage can be set up two ways. With an adjustable-payment variable, your payment itself moves when rates move. With a fixed-payment variable, the payment stays the same, but the split between interest and principal shifts.
Neither one is the wrong answer. They are two different trade-offs, and the right pick is the one that fits your life and your budget. If you cannot decide, the term length is a quiet third lever. A shorter term lets you reset sooner, without betting on the whole five years.
Your variable rate follows your lender's prime rate, which tracks the Bank of Canada policy rate. Your fixed rate follows the lender's funding costs in the bond market. So variable is tied to one Canadian rate, and fixed is tied to the broader market.
Here is how each one moves. The Bank of Canada sets its policy rate on eight fixed dates a year. As of June 10, 2026 that rate is 2.25%, held since October 2025. When the Bank moves the policy rate, the prime rate follows, and your variable rate rises or falls with it.
Fixed rates work differently. Lenders raise the money for fixed mortgages from investors, so fixed pricing follows Government of Canada bond yields. When those yields climb, fixed rates tend to climb with them.
This is also why fixed usually starts a bit higher than variable. You pay a small premium for the lender to carry the risk of locking your rate. With variable, you carry that risk yourself, which is why it often starts lower.
Neither is a trick. It is just a question of who holds the uncertainty.
One honest caveat. Rates change, and a Bank of Canada decision is never far away. Always check the current rate before you decide. You can read the details straight from the Bank of Canada's policy interest rate page.
Real data, straight from the source
This is the rate your variable mortgage follows. It stepped down through 2025, then held flat. Hover or tap any point to see the rate on that date. These are the real Bank of Canada figures, not an estimate.
Source: Bank of Canada, target for the overnight rate. Latest point June 10, 2026, at 2.25%. The Bank sets this rate on eight scheduled dates a year, so it can change again.
Why show you this? Because a variable rate would have fallen right along with that line. That drop, and the pause that followed, is a big reason I lean the way I do below.
Here is what I would do today, framed as my honest lean, not a promise. As of June 10, 2026, with the policy rate at 2.25%, I lean slightly toward variable, or toward a shorter fixed term. I like the flexibility and the smaller break penalty. But that only holds for someone who can comfortably handle a payment swing.
Let me be straight, nobody can promise where rates go from here. If a rising payment would keep you up at night, lean fixed. That small premium buys a payment that never moves.
So, fixed or variable mortgage 2026, here is the way I think about it. If your budget has room and you value cheap flexibility, variable or a short term fits. If money is tight and certainty beats a slightly lower start, fixed fits. It comes down to one question, how much of a swing can you truly absorb.
How do you know if you can handle the swing? Try a simple gut check. Imagine your payment rising by a few hundred dollars a month for a year.
If that would force hard choices at the dinner table, lean fixed. If you have a cushion and steady income, variable is easier to ride.
I will lay out both payment scenarios on a screen-share, with your real numbers, so you choose with the facts in front of you.
Interactive fixed or variable lab
Pick one answer in each row. The balance rail responds as you go. It is a conversation starter, not a rate quote or a recommendation.
Fixed 0/6 · Variable 0/6
Choose all three trade-offs to see which direction your priorities point.
This is the wedge most people miss, and the most expensive mistake I see. A closed variable usually breaks for about three months' interest. A closed fixed breaks on the greater of that or the interest rate differential, the IRD. That can be several times larger.
The FCAC gives a clear worked example. Picture a $200,000 balance at 6%, with 36 months left in a five-year term. The current posted 36-month rate is 4%.
Three months' interest works out to $3,000. The IRD works out to $12,000. You pay the higher one, so the penalty is $12,000.
Source: Financial Consumer Agency of Canada worked example. A $200,000 balance, 36 months left at 6%, lender now posts 4%. You pay the greater of the two, so $12,000, four times the smaller figure. A dated illustration, not your quote.
The FCAC notes these penalties can cost thousands of dollars. The IRD balloons when today's rates sit below your contract rate. The lender is counting the future interest it would miss.
There is a pattern here too. Big banks generally charge larger IRD penalties than monoline lenders and credit unions. Same rate on paper, very different cost to leave.
A rate is not just a rate, the penalty matters.
I always check one more thing beyond the penalty, and that is prepayment privileges. A lender that lets you pay extra, or bump your payment up, helps you clear the balance faster. When two offers tie on rate, the smaller penalty and better prepayment terms win in my book.
Why does this matter when you are only choosing a rate today? Because life happens. People sell, separate, refinance, or want a better rate two or three years in.
A smaller penalty keeps you free to move. If you want the full mechanics, here is how a mortgage break penalty is calculated. You can also read the FCAC guidance on reducing prepayment penalties directly.
From my own files, as of 2025 to 2026
Across my funded deals in 2025 to 2026, I placed 38 mortgages across 13 different lenders. More than 70% went to credit unions, monoline lenders, and alternative lenders. My single most-used lender was one big bank, with 11 files, and even that is a minority of the total.
Those non-big-bank lenders usually carry the smaller three-months-interest penalty. So my everyday choices quietly back the smaller-penalty argument. I am not steering everyone to one shelf. I am shopping the whole market for the best total fit.
Often, yes. Many variable mortgages are convertible. That lets you lock into a fixed rate for the rest of your term, usually with no penalty. If yours is not convertible, switching means breaking the contract and paying the penalty.
If breaking is the only way, there are two ways to soften the cost. First, use your prepayment privileges before you break, since a smaller balance means a smaller penalty. Second, if you are close to the end, it may be cheaper to wait. Then you renew at a fixed rate with no penalty at all.
People usually ask about switching when rates start climbing, and a fixed payment suddenly looks safer. That instinct is fair. Just make sure the cost of switching does not wipe out the comfort you are buying.
The simplest move is to have me read your contract and find the conversion clause before you do anything. This same thinking applies when your renewal comes up, so it is worth planning early.
In Ottawa, a lot of buyers have steady public-service income, which lenders tend to price well. That stability can make either choice comfortable. Either way, both a fixed and a variable mortgage have to pass the same stress test.
Here is how that test works. For an uninsured mortgage, you qualify at the greater of your contract rate plus 2%, or a floor of 5.25%. It is a safety margin, not your actual payment. You can read the rule on the OSFI minimum qualifying rate page.
The qualifying rate is the greater of your contract rate plus 2% or a 5.25% floor. Here 4.00% plus 2% is 6.00%, which beats the floor, so you must qualify at 6.00%. Source: OSFI minimum qualifying rate for uninsured mortgages. Illustrative, not your approval.
There is one helpful exemption. Say you do a straight switch to another federally regulated lender at renewal. If your loan amount and amortization do not go up, the stress test does not apply.
Whichever way you go, I stress test your own budget too, not just the lender's number. That way a future rate change does not catch you off guard.
One more Ottawa detail. If your down payment is under 20%, your mortgage is insured, and it follows its own qualifying rules. At 20% or more you are uninsured, which is where the stress test I described applies.
Many first-time buyers are surprised by this split, so it is worth sorting out early. Before you shop for a home, it is smart to run your own numbers so you know your real budget.
Still wondering?
Variable rates usually start lower than fixed. Whether it is cheaper overall depends on where rates go, which nobody can promise. As of June 10, 2026 the policy rate is 2.25%. I will show you both payment scenarios so you can decide.
Often, yes, if your mortgage is convertible. You lock into a fixed rate for the rest of your term, usually with no penalty. If it is not convertible, locking in means breaking the contract. I can check your contract and tell you which one you have.
Usually, yes. A closed variable typically breaks for about three months' interest. A closed fixed breaks on the greater of that or the IRD. As the FCAC example shows, the IRD can be several times larger.
If you have a variable mortgage, the change flows through your prime rate. With an adjustable-payment variable, your payment moves up or down. With a fixed-payment variable, the payment stays put, but more or less of it goes to interest.
No. There is no fee for my service. You do not pay me a fee to shop both options across dozens of lenders and lay the numbers out for you.
It is the point where your fixed payment no longer covers the interest. If rates rise past it, your payment stops paying down principal, and what you owe can grow. The FCAC advises calling your lender early if you get close.
About the author
I am Nick Bachusky, a Mortgage Agent Level 1 working under Referral Mortgages Inc. (FSRA #13316). I have spent 14 years in mortgages, including time at RBC and TD. I have seen how the big banks and the smaller lenders really price a file.
I work one file at a time and I keep it simple. Every client should feel like my only client. If you want a plain-language read on your own fixed versus variable choice, I am one WhatsApp message away.
Nick Bachusky · Mortgage Agent Level 1 · Referral Mortgages Inc. · FSRA #13316. Rate and penalty figures on this page are dated examples (June 2026), not quotes or guarantees. Always confirm the current rate before you decide.
Keep reading
A few plain-language reads to take the next step, from today's rates to the penalty math and your real numbers.
See today's fixed and variable rates, quoted by file, and the penalty behind each one.
Nick Bachusky July 2026 The IRD explained, and what it really costs to leave a fixed mortgage early.
Nick Bachusky July 2026 Estimate your real monthly payment before you shop, so you know your true budget.
Nick Bachusky July 2026 Use a real competing offer to compare rate, penalty, portability and fees before you sign.
Nick Bachusky July 2026 4.9 stars from 61 Google reviews left by clients I have worked with across Ottawa.
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I will shop both across dozens of lenders and show you the real numbers, penalty and all. No pressure, no exclusivity.
Nick Bachusky · Mortgage Agent Level 1 · Referral Mortgages Inc. · FSRA #13316.