3-year variable mortgage rates

3-year variable mortgage rates are also called adjustable mortgage rates. Should you opt for a mortgage of 3 years, your lender will set an interest rate that varies according to the Prime Lending Rate. This prime rate is the interest rate that banks offer their creditworthy customers when giving loans. Your lender will fix a discount (deductible) or premium (added) rate on the prime rate.

For instance, if the prime lending rate is 4%, the variable rates can be either 3.5% (discount) or 4.5% (premium). This program protects you against any drastic changes in the interest rates during the 3-year period. Typically, you can expect to pay lower rates of interest in the variable mortgage rate program as compared to the fixed rate mortgage program. That's because you'll pay a fixed rate of interest irrespective of the varying prime lending rates of the variable mortgage.

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  • Term
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3 Years

Variable Closed


15% Monthly

10% Lumpsum


3 Years

Variable Closed


15% Monthly

15% Lumpsum

Best 3-Year Variable Mortgage Rates

Positives of 3-Year Variable Mortgage Rates

  • You could choose the 3-year variable mortgage rates if they are lower than the 5-year variable mortgage rates.
  • These programs are also more beneficial if you intend to sell your home in three years’ time.
  • If you intend to refinance your mortgage without incurring prepayment penalty, this program could be a better choice.
  • You might also incur a lower penalty for paying off your mortgage before it becomes due.
  • You’re likely to incur lower interest rates with variable plans as compared to fixed rate plans. That’s because interest rates have been dipping over the last 30 years.
  • If you think the prime lending rate could drop in the future, opting for the 3-year variable mortgage rates over 5-year plans might seem advantageous.

Downsides of 3-Year Variable Mortgage Rates

  • You’ll risk paying much higher rates if the prime lending rates rise.
  • If you have a higher than average debt ratio, you might not be able to get the variable mortgage approved. Further, if you have a lower than 20% equity in the property, you’ll have to qualify according to the benchmark 5-year rate that the Bank of Canada affixes. Your lender will require you to prove that you can make the payments set by the 5-year fixed rate plan.
  • You might set up a fixed monthly mortgage payment depending on the varying interest rates. In case the rates go up and down, your payment amount might also fluctuate accordingly.

Here’s some added information you might interesting:

  • Because of the fluctuating interest rates, only 29% of all mortgages are variable rate programs. The rest are fixed-rate with more predictable interest rates.
  • Around 20% of Canadians have mortgages that range from 2 to 4 years. Older age groups prefer the short-term variable plans and prefer to take lower risks as compared to younger generations that prefer long-term variable plans.

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