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2.34%

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5-Year Fixed Mortgage Rates

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5-Year Fixed Rate Mortgage

The length of your mortgage term plays a vital role in the entire mortgage process. Mortgage breaking can be an expensive affair, especially if your are with one of the big banks or lender. You may also face a five-figure mortgage penalty if mortgage rates drop heavily. However, according to a survey conducted by the Canadian Association of Accredited Mortgage Professionals (CAAMP), the five-year fixed rate mortgage is preferred by two thirds of Canadians. In fact, nowadays, more and more people are heading towards fixed mortgages than variable mortgages.

The length of your mortgage term plays a vital role in the entire mortgage process. Mortgage breaking can be an expensive affair, especially if your are with one of the big banks or lender. You may also face a five-figure mortgage penalty if mortgage rates drop heavily. However, according to a survey conducted by the Canadian Association of Accredited Mortgage Professionals (CAAMP), the five-year fixed rate mortgage is preferred by two thirds of Canadians. In fact, nowadays, more and more people are heading towards fixed mortgages than variable mortgages.

All You Need to Know About 5-Year Fixed Mortgage Rates

5 year fixed rate mortgage guarantees that your mortgage payments will remain constant for the next 5 years. It is the kind of term that banks and lenders like to compete on, which is why they often provide the best value. The 5-year term provides you the stability of the interest rate and ability to maintain your budget over those 5 years. Apart from this, you are expected to be in the home or retain the ownership for that stipulated period.

In case, you want to break out the mortgage before the 5 year term, you may be liable to pay penalty issued by the lender. You can also think of increasing the regular payments and make yearly lump sum contributions up to a percentage limit that most lenders allow adding in their mortgage offer.

How do Banks set their 5 year rates?

Canadian banks look at their own borrowing cost before setting their 5 year rates. Fortunately, mortgage shoppers can easily determine banks’ borrowing cost by evaluating the 5 year bonds yields. Yields are up bank’s cost are up and vice-versa. Bonds trade daily which means the 5 year mortgage rates can fluctuate at anytime.

5-Year Fixed Mortgage vs. Variable Rate Mortgage

Mortgage shoppers often juggle between fixed mortgages and variable mortgages. Where fixed mortgages keep your mortgage payments constant, the variable rates fluctuate with the Prime Rate set by the Bank of Canada. If the Prime Rate goes up, you are liable to pay more interest (the opposite is also true). On the contrary, the fixed mortgage rate will be unaffected by such changes for the entire term.

Borrowers prefer the variable mortgage due to the notion of interest rate decreases during the term of mortgage. Though, there are chances that you can save a considerable amount of money if rates decrease during the term, but the potential risk remains with it as well. If you are planning to take a variable rate mortgage, make sure you ask yourself the following questions:

  1. Can you sleep calmly at night knowing the risks involved with a variable rate?
  2. Do you have sufficient budget to handle a 3 to 4 percentage increase in your mortgage rate if prime increases?

If you can answer yes to both the questions, you can definitely go for a variable rate mortgage. But, if you think you are at a high risk, a fixed mortgage rate must be your last verdict.

Our agents, at GN Mortgages.ca, will be there to support you right from the beginning till the end. We will help you select the best mortgage option – fixed or variable. If you choose a 5-Year Fixed Mortgage Rate, we will recommend you the reputable banks and lenders to get the maximum benefit out of your mortgage option. Our responsibility doesn’t end with the end of the 5 year term, our mortgage agents will also help you with your refinancing or mortgage renewal needs. You can rely on us for all your mortgage needs.

Call our mortgage agents today to discuss 5-Year Fixed Mortgage options!
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