3 year mortgage rate in Canada usually have constant interest rates for a period of 3 years. This shouldn’t be confused with amortization period which refers to the period of time required to pay off the mortgage. The 3 year period is simply the period the borrower is committed to contractual provisions and the mortgage rates with their lender.
Compare the Best 3 Year Fixed Mortgage Rates in Canada
There are several factors in existence which support the choice of the 3 year fixed mortgage rates. For instance, if a borrower believes that they are currently in the falling interest rate surrounding, then the term is more strategic. Instead of a borrower being locked in a rate for more years longer, the borrower can seize the advantage of the low rates as soon as their mortgage is ready for renewal.
The 3 year mortgage rate is also practical if one is probably going to break their mortgage in a few year time. For instance, if you want a home upgrade, going for the 3 year term will save you good amounts of cash in the penalty costs.
How Popular is 3 Year Fixed Mortgage Rates in Canada
3 year mortgage terms aren’t Canada’s most popular, but they make some sense when it comes to certain circumstances. About 20% of the Canadian population have mortgage terms ranging between 2 and 4 years, and the figure is slightly higher in the case of younger people. However, fixed rates is generally the most popular in the country as 66% of mortgage rates are fixed. There exists a slight difference in the uptake amongst different age groups.
Pros & Cons of a 3yr Fixed Mortgage Rate
The advantage of the 3 year fixed mortgage rate is that:
You’ll have constant monthly mortgage payments
You’ll also be protected against the fluctuations of interest rates. However, the variable rates have been proven to have be cheaper when historically examined, even though they are exposed to the changes in prime lending rates.
It provides a better refinancing flexibility as you can renegotiate your mortgage sooner with no penalty.
3 year mortgage rates also have a number of disadvantages:
There’s no protection at renewal should the rates jump, as it in the case of longer fixed terms.
If you terminate your mortgage early, the penalty is higher.