Most of the Canadian banks offer the 7 year fixed mortgage rate to the borrowers seeking something with more commitment than usual 5 year term. Banks are however not the only game players, mortgage brokers, credit unions and specialty lenders also offer special rates which are designed purposely to undercut banks. However, they tend to compete with the terms which are at most five years.
The 7 year fixed mortgage rate has a very poor penetration among borrowers with only 1% or even less choosing it. Most of the lenders will pay the borrowers appraisal and legal fee when the latter switch into the 7 year mortgage. However, one cannot switch a mortgage that’s been linked to a credit line or a collateral charge mortgage. These mortgage types must be refinanced when the borrower is changing the lender.
The 7 year fixed rate term isn’t as popular as the 5 year term since it is only desirable to those who want something higher than 5 year term but not ready to pay the higher 10 year term rates. This population comprises of the minority.
The 7 year fixed mortgage rate is chosen by some people due to the following reasons:
However, the 7 year fixed mortgage rate has a few disadvantages: