|1-YR||1.56%||Mortgage financing company||Get this rate|
|2-YR||1.54%||Mortgage financing company||Get this rate|
|3-YR||1.48%||Mortgage financing company||Get this rate|
|4-YR||1.53%||Mortgage financing company||Get this rate|
|5-YR||1.44%||Mortgage financing company||Get this rate|
|6-YR||2.59%||Big bank||Get this rate|
|7-YR||1.83%||Mortgage financing company||Get this rate|
|10-YR||1.94%||Mortgage financing company||Get this rate|
|1-YR||2.44%HELOC ratePrime +1.00%||Scotiabank||Get this rate|
|2-YR||2.24%HELOC ratePrime +1.00%||Scotiabank||Get this rate|
|3-YR||2.14%HELOC ratePrime +1.00%||Scotiabank||Get this rate|
|4-YR||2.09%HELOC ratePrime +1.00%||Scotiabank||Get this rate|
|5-YR||1.69%HELOC ratePrime +1.00%||MCAP||Get this rate|
|7-YR||2.44%HELOC ratePrime +1.00%||Scotiabank||Get this rate|
|10-YR||2.84%HELOC ratePrime +1.00%||Scotiabank||Get this rate|
Find The Best Fixed Mortgage Rates
Currently, nearly 70% of homebuyers in Canada have a fixed mortgage rate. And, more than 60% chose 5 years as the renewal term for their mortgage.
Having a ‘fixed’ rate means that your rate will remain the same over the term of your mortgage. The ‘term’ refers to the duration of your current rate, whereas your ‘amortization’ is the length of time it will take to completely pay off your mortgage.
Although the 5-year fixed-rate option is undoubtedly the most common choice selected by Canadian homeowners, this isn’t always the best choice for everyone. Your decision should be based on your risk tolerance as well as your ability to withstand increases in mortgage payments. This is where our expert support is even more invaluable.
Sometimes it makes sense to opt for a lower or higher term than 5 years. Did you know that you could secure a fixed-rate mortgage at any increment ranging from 1 to 10 years? We can advise which option best suits your unique needs.
Although several factors come into play that affect fixed mortgage rates, the main one is Government of Canada bond yields. Fixed-mortgage rates typically move in alignment with government bond yields with the same term. In other words, 5-year fixed rates would be most influenced by 5-year Canada bond yields.
There is, however, a spread – difference – between the mortgage rates and the coinciding bond yields. This is because mortgage lenders set the spread based on such variables as their desired market share, competition, marketing strategy and general credit market conditions.
It’s important to understand that all borrowers must meet the standards of approval for the Bank of Canada’s benchmark 5-year fixed qualifying rate even if you choose a mortgage with a lower interest rate and shorter term. This benchmark is in place to both reduce the lender’s risk as well as ensure you can comfortably afford to pay back your mortgage.
Fixed Rates Offer Predictable Monthly Payments
If you enjoy the convenience of knowing exactly what you’re going to pay each month towards your mortgage, a fixed rate definitely makes sense because you have a fixed term in place where your payments will never change. In fact, you can think of a fixed rate as insurance that your rate will not rise over the term you’ve selected (1-10 years).
Fixed-rate mortgages appeal to homebuyers who are looking for a dependable payment schedule, manage a tight monthly budget, or are generally more conservative. For instance, young families with large mortgages relative to their income may be better off opting for the peace of mind that a fixed rate provides.
Beware of Penalties to Break Your Mortgage
With many fixed-rate mortgages, the penalty charged to get out of that mortgage prematurely can be quite substantial, especially if it’s early on in your mortgage term.
Many borrowers assume the penalty for breaking a mortgage amounts to three months’ worth of interest payments, which is the case for a vast majority of variable-rate products. But, with a fixed-rate mortgage, the penalty is the greater of three months’ interest or the interest rate differential (IRD).
The IRD calculation is what’s responsible for those huge penalties you hear about borrowers paying to break their mortgages. Penalties vary from lender to lender, however, and there are different penalties for different types of mortgages.
Historically, you can expect a financial reward for choosing a variable rate over a fixed, although the savings vary depending on the economic environment. This is because a variable-rate mortgage often allows you to take advantage of lower rates as the interest rate is calculated on an ongoing basis at a lender’s prime rate minus a set percentage. But this fluctuation is also what makes variable options appear more risky to many borrowers.
As a homebuyer or homeowner, your best option is to always have a candid discussion with your mortgage agent to ensure you have a full understanding of the risks and rewards of each type of mortgage – including many other aspects of your mortgage that are just as important as rate in ensuring your money is maximized each month – so you can make an educated decision.