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7-Year Fixed Rate Mortgage

The constant news-feed and continuing discussion about fluctuations in the interest rate of mortgages often confuse consumers. Those mortgage shoppers who look for a certain degree of stability and are comfortable with the current interest rates available often head toward longer fixed term mortgages.

The 7 year fixed mortgage is ideal for consumers who want to get stick to a definite mortgage payment and do not wish to constantly monitor interest rates. On the other hand, those mortgage shoppers who pay due attention towards interest rates and expect significant increase in the forthcoming years will also be inclined to head towards longer fixed term mortgages.

Remember, the interest rates are dynamic in nature. While they are favorable for a few consumers, they are also distressing for others. You may not get the expected benefits if rates come down during the full term. Also, borrowers will face a penalty if they decide to break the mortgage before the term expires.

Open Mortgage vs. Closed Mortgage

An open mortgage provides you an opportunity to pay off the entire balance amount of the mortgage at any time within your term, without any penalty. Thus, it is the best option for those who are planning to move soon or expecting a lump sum of money from an inheritance. The negative point of open mortgage is that you have to pay a premium which comes with a higher interest rate.

On the other hand, closed mortgages are preferred by Canadian homebuyers as the interest rates are relatively low. With a closed mortgage, borrower is restricted to make a certain mortgage payment each year which is defined in the prepayment options of the mortgage contract. If you break the deal before the term expires, you’ll be hit with a prepayment penalty.

Understanding Prepayment Charges

Prepayment charges are associated to mortgages where the interest term is ‘closed’. The closed term allows you to make prepayments up to 10% of the entire mortgage balance. The prepayment restriction allow for a lower rate than a borrower may receive if the term was ‘open’. When you prepay your mortgage above this limit you are reshaping the terms of the contract that results in the Bank incurring a cost for your mortgage.

Why Choose GN

Being a borrower, it is important to discuss mortgage saving opportunities including prepayment options and lump sum contributions. Our mortgage agents, at GN Mortgages, will suggest you the most reliable ways to minimize your costs. We recommend our customers to increase their payment frequency in order to save money during the mortgage term.

Make sure to consider a few other factors such as how long you wish to stay in the home and what will be the consequences of upgrading to a bigger home or downsizing to a smaller home during the mortgage term.

Call our experienced mortgage agents today to discuss 7-Year Fixed Mortgage Rates!
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