Fixed vs Variable Mortgage in Canada: What I'd Choose Right Now

What is the difference between a fixed and a variable mortgage?

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.

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.

Should I get a fixed or variable mortgage right now?

Here is my honest lean, not a promise. The Bank of Canada policy rate has sat at 2.25% since October 2025 and was held again on September 2, 2026, and on that footing 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.

Fixed or variable if you're buying in Ottawa (and will you pass the stress test)?

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.

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.