No web page can tell you whether fixed or variable is better in 2026 — the answer depends on your financial profile, your risk tolerance, and what the Bank of Canada will do over the next few years (which nobody knows with certainty).
What we can do: walk through the real parameters to look at before choosing, and let an AMF-licensed mortgage broker present the actual rates available for your file.
What each option really is
Fixed rate
The rate is locked for the term (often 5 years). Your monthly payment doesn't change, regardless of what the Bank of Canada does. Maximum safety, but a very heavy break penalty if you exit before maturity — the IRD penalty, which can reach $10,000-15,000 depending on the lender's formula.
A fixed rate suits borrowers who want absolute predictability and know they won't break the term.
Variable rate with fixed payments
The rate follows the bank's prime rate, but the monthly payment stays fixed. If the rate rises, more of your payment goes to interest and less to principal (the amortization effectively lengthens). If it drops, the reverse. Break penalty: only 3 months' interest — far gentler than fixed.
Variable rate with variable payments
The rate and the monthly payment move together. More transparent about the real impact, but requires budget slack to absorb hikes without stress. Rarer in Quebec than the fixed-payment variable.
Short term (1, 2, or 3 years)
A third option often overlooked: a short fixed term. You lock a rate for 2-3 years instead of 5. It's relevant if you anticipate a rate drop in the medium term, if you plan to sell, or if your situation is going to shift (baby on the way, expected promotion that will change your profile).
The 4 concrete parameters to examine
1. Your real horizon
How long do you plan to keep this property or this financing? If you know you'll sell, relocate, or refinance within 2-3 years — job transfer, separation, planned resale, growing family — the fixed break penalty becomes a central factor. Variable, with its 3-month interest penalty, cuts that risk by several thousand dollars.
If instead you're stable in your property and nothing is forcing an early exit, fixed is a valid protection against volatility.
2. Your real tolerance for payment volatility
A 1% hike on a variable rate is roughly $60-70/month more per $100,000 of mortgage. On a $350,000 mortgage, a 1% hike = $210-245/month more.
Ask yourself honestly: does that keep me up at night, or is it within my budget? There's no right or wrong answer — the mental cost of an uncertain payment has real economic value. If you know you'll be checking Bank of Canada announcements each month with anxiety, fixed has value beyond the number.
3. Your headroom in the stress test
When you were qualified for your mortgage, the lender stress-tested you at a rate roughly 2% above the contract rate (or the benchmark rate — whichever is higher). See our guide to the stress test.
If your file passed with significant headroom (ratios well under the caps), you can absorb large swings without difficulty. If you were right at the limit, variable is riskier.
4. The current spread between fixed and variable
Historically, variable has cost about 1% less than fixed over long periods. But that spread shifts over time: sometimes it's minimal (under 0.25%), sometimes it's inverted (variable more expensive than fixed).
The decision has to account for the real spread at the lenders available for your file — not a historical average. An AMF broker gives you that number.
Fixed vs variable: the scenario calculation
To make an informed decision, ask your broker to model two scenarios:
Scenario 1 — Rates rise 1% over 12 months
- Extra cost if variable: +$X/month for the rest of the term.
- Cost if fixed: $0/month more (but IRD penalty if you want to exit).
Scenario 2 — Rates drop 1% over 12 months
- Savings if variable: -$X/month.
- Savings if fixed: 0 (but a conversion option if the lender permits).
This isn't a prediction — it's a tool to understand your exposure in each case.
Hybrid and convertible options
A few lenders offer useful intermediate structures:
50/50 mortgage: half fixed, half variable. You get partial stability and partially benefit from drops. Penalties are calculated proportionally on each tranche.
Variable convertible to fixed: you start variable and can convert to a fixed term without penalty if rates climb past your comfort zone. The catch: conversion happens at the lender's posted rate at the time of conversion — not the negotiated rate. Verify this before signing.
Short fixed term (2-3 years): an alternative to variable for those who want short-term safety without committing to 5 years. The break penalty is proportionally smaller (3 months' interest or IRD over a shorter duration).
Questions to ask your AMF broker
Before signing, ask:
- What's the current spread between fixed 5-year and variable 5-year for my specific file?
- What penalty would I pay if I had to break the term in 24 months?
- Does my lender calculate the fixed penalty using the posted rate or the discounted rate? (This can double the penalty.)
- Is there a lender that offers a convertible on good terms for my profile?
- Is a short term (2 or 3 years) relevant given my horizon?
These questions don't require predicting the future — they let you understand the real mechanics of each option before committing.
What Courteo can do
We connect you with a Courteo-network AMF-licensed broker who can:
- Calculate the real fixed/variable spread at lenders available for your file.
- Model several penalty scenarios by lender type (posted rate vs discounted rate).
- Propose hybrid or convertible structures if they're available and relevant.
Courteo doesn't give an opinion on fixed vs variable — that's a choice that belongs to you and requires the personalized analysis of an AMF broker.
Frequently asked questions about fixed vs variable in Quebec
Is variable always cheaper than fixed over the long run?
Historically in Canada, variable has cost less than fixed over most 10+ year periods. But "historically" doesn't mean "always" — 2022-2023 is a recent counter-example. It's not a promise, it's a long-term trend with exceptions.
Can I switch from fixed to variable (or vice versa) mid-term?
Generally no, unless your contract includes a conversion clause. Switching rate type mid-term means breaking the current contract — with the associated penalty. Conversion has to be planned before signing, not after.
Can a variable rate with fixed payments force me to pay extra fees?
If the variable rate rises to the point where your fixed payment no longer covers the interest (a threshold called the "trigger rate"), some lenders raise the payment or ask for a lump-sum. It's rare but it happened in 2022-2023. Check this threshold with your broker.
Does the term length (5 years vs 3 vs 2) matter as much as the rate type?
Yes — in some contexts, the term length choice matters more than the fixed/variable choice. A short 3-year fixed term can be cheaper than a 5-year variable if rates drop within 3 years. It's an additional variable to fold into the analysis.