5 Year Variable-Closed Mortgage Rates in Canada

Current Mortgage Rates Canada

Mortgage rates in Canada continue to remain extremely low, however, recent measures by the Government of Canada to control consumer debt cut the maximum amortization on a Canadian mortgage from 30 to 25 years, making it vital for home buyers to shop around for the best mortgage rates in Canada.

Compare Mortgage Rates in Canada

Ratesheet.ca allows you to compare with some of the top brokers in Canada with a few simple clicks. We compare mortgage rates from banks, mortgage brokers, private institutions, private lenders and more.

Canada Mortgage Brokers

A Few Tips for Choosing a Mortgage Broker in Canada

Over 1.2 million people live in Canada, making it the fourth largest urban area in the country. Obviously, you would expect such a big city to have numerous homes for sale and mortgage brokers to handle the transactions. Since it may be difficult to locate a mortgage broker you can count on in big place, there are a few tips you can use to ease the process.

If you have friends or colleagues who have used brokerage services in the area, you can start your inquiries from them. When you do get to meet a mortgage broker in Canada, don't let him/her do all the talking. Ask as many questions as necessary to help you gauge his/her suitability. There are professional bodies that licensed mortgage brokers should belong to, and you should check that the person you wish to deal with subscribes to the relevant ones. Get the best broker to get the best rate.

Fixed Mortgage Rates vs. Variable Mortgage Rates

Fixed Mortgage Rate: A fixed rate means that your interest rate remains the same (fixed) for the entire term (duration) of the mortgage. Generally, this means the percentage of interest will be a little higher since the lending institution may be losing money in the future if the interest rates rise. A fixed rate mortgage provides a buyer with the serenity of knowing the cost of their interest will stay the same over time. This means your payment and the amount that goes towards reducing the principal (original mortgage amount) will remain the same over time as well.

Variable Rate: A variable rate means the percentage of interest that you are repaying will vary based on the changes in the interest rate(s) of the overall market. Typically, fluctuations in your interest rate will not alter your monthly payment, but will vary the amount of your monthly payment that goes towards reducing your principal (original loan amount). This means if overall interest rates go down you will actually be paying off your mortgage more quickly. On the other hand, if interest rates increase, you will be paying off your mortgage more slowly. Accepting a variable rate does involve a certain amount of risk but can work to the advantage of the buyer over time.

Open Mortgage vs. Closed Mortgage

Open Mortgage: An open mortgage means that the loan can be paid back partially or in full without incurring any penalties. The mortgage can also be renegotiated if market conditions or your financial situation shift. Although an open mortgage provides more options and opportunities for life adjustments, this comes at a cost, as the interest rates for this type of loan tend to be higher. For those able to make larger payments or who plan on selling their home within a short period of time; however, an open mortgage can be a solid choice.

Closed Mortgage: The advantage of a closed mortgage is that the interest rates tend to be lower, but options are limited. Typically a homeowner may make extra payments or larger payments as long as the sum of the payments does not exceed a set amount determined in the loan agreement. Payments exceeding the agreed upon amount; however, would incur penalties.

Although most buyers will elect to choose a closed mortgage, there are advantages to choosing the open mortgage. For instance, if market conditions are expected to change, the type of mortgage should be balanced against the type of interest rate so that as the buyer your needs are met.