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5-Year Variable Mortgages in Canada: Find the Best Rates
We are your source to find the lowest 5-Year Variable Mortgage Rates offered in Canada by banks and mortgage brokers.
5-Year Variable Mortgage Rates Canada
A 5-year variable Mortgage Rate Canada has a fluctuating interest rate for the term of 5 years. Your lender might also include conditions for the repayment of the principal mortgage amount. You can choose between two variable payments. To predict future interest rates, keep watch on the earnings over a 3-month period on the Canadian government T-bonds.
- Floating Payment: The lender fixes a prime rate and asks you to add or deduct the interest rate according to market conditions. For instance, if the prime rate is 8%, you might pay, say, prime plus 0.5% interest which works out to 8.5%. Or you might pay prime less 0.5% which is 7.5%. As for the mortgage principal payment, you’ll pay a fixed amount each month.
- Fixed Payment: According to these, you must pay a fixed amount each month against the mortgage principal and interest. If the market interest rates are low, the lender will deduct the additional amount you pay. But if the market rates rise, the lender will deduct a lower amount from the principal mortgage amount.
Opting for the 5-year variable Mortgage Rates Canada has its advantages:
- Variable Mortgage Rates Canada are typically lower than the fixed rate Mortgage Rates Canada, and you can always take advantage of falling interest rates.
- You can opt for shorter variable Mortgage Rates Canada. For example, you might take a mortgage for 3 years if you think you might want to refinance and upgrade your property. You would not incur significant penalties.
5-year variable Mortgage Rates Canada have their downsides, too:
- If market conditions show an uptrend, your interest rates will be affected accordingly.
- If you have an above-average debt ratio, getting approved for the variable Mortgage Rate Canada plan may be difficult. You must prove to the lender that you can make payments if the 5-year fixed rate becomes very high.
- If you have less than 20% equity in the property, you’ll have to prove eligibility according to the Bank of Canada’s benchmark five-year rate.
- In the case of variable mortgage rates, you cannot have a clear view of the expected timeframe for which your mortgage will last. That’s because payments vary from month to month.
Additional helpful information about 5-year variable mortgage rates Canada:
- When comparing both fixed- and variable interest rates, you’ll find that recently the differences have only been around 1.25 percentage points.
- More people opt for variable interest rates when they expect that the prime rates are likely to fall.