Are you looking for the best 5-year fixed mortgage rates in British Columbia? Here, we’ll help you to compare mortgage rates from banks and mortgage brokers in BC to help you find the most suitable rate for your needs.
Mortgage rates can be fixed or variable. A fixed mortgage means that the rate is set at a specific percentage for the term, while a variable mortgage rate fluctuates according to the market interest rate (also known as the prime rate).
5-year mortgage rate British Columbia
A 5-year mortgage rate depicts the length of a ‘mortgage term’ – essentially, the length of time you commit to a specific mortgage rate.
This doesn’t mean that your mortgage will be paid off in 5 years.
The time period to pay off the entire mortgage is called the Amortization Period. Think of the mortgage term as a threshold, after which you would need to renew your mortgage for a new term.
5-year fixed mortgage rate in British Colombia
One of the biggest advantages of a fixed rate mortgage is that you’ll always know how much your mortgage payments will be, whether the rates increase or decrease.
A fixed mortgage rate will allow you to plan your budget without worrying about your mortgage payments changing for the length of the term. For example, on a 5-year fixed mortgage in BC with a rate of 2.45%, you’ll pay 2.45% interest throughout the term of the mortgage (5 years in this case).
Although it may seem like a longer mortgage term offers more stability, it’s recommended to lock in BC’s lowest interest rate for 5 years. However, there’s always the chance that you may end up paying higher interest when variable rates are low.
Why is a 5-year fixed mortgage popular in British Columbia?
A 5-year fixed mortgage is the cheapest mortgage option for anyone who wants to lock in their payments and interest for a suitable term. This fixed term means that you don’t need to re-finance or risk being charged a higher rate on your mortgage before the 5-year term is over.
If you decide to switch to a 5-year fixed mortgage term, most lenders will pay for legal and appraisal fees. However, it’s important to note that you can’t change or switch a collateral charge mortgage or a credit-linked mortgage. When changing lenders, these mortgage types will need to be refinanced.
Some disadvantages of taking out a 5-year fixed mortgage in British Columbia:
If you’re situation is uncertain and you need to break the mortgage before the term ends, you could be subject to a high penalty from the lender. This penalty could be significantly higher, as it’s calculated using the lenders posted rates, as opposed to the actual rate.
Also, long-term fixed rates accrue more interest when compared to a variable and short-term fixed rates.
Nonetheless, 5 years is a popular mortgage term and about half of all mortgages have 5-year fixed terms. At times when the difference between fixed and variable rates is minimal, most people will choose the stability of a 5-year fixed rate in BC.