Canadian home buyers should know that 5-year variable mortgage rates are some of the most affordable interest rates available in the country today. We are the best resource for 5-year variable mortgage interest rates in Canada. Our research has collected the top variable interest rates in one place, and we make it simple to apply for the mortgage that will best meet your needs. This guide will help you figure out whether a 5-year variable mortgage is right for you, and after reading it, you can click on the mortgage rate you want to apply for a loan.
Understanding 5-Year Variable Mortgage Rates
With a variable-rate mortgage, the interest rate percentage charged may vary from month to month during the loan term. The 5-year variable mortgage rate has an interest rate that may change as often as monthly until term ends. Banks use standard formulas to calculate rates, usually basing these rates on the prime rate plus or minus a few percentage points. So, when the prime rate changes, the interest rate on your variable-rate mortgage changes as well.
Typically, as variable rates change, so do the minimum required principal and interest payments. Sometimes, lenders offer a cap on rates that is the absolute highest rate you will pay even if average variable rates exceed the cap. Others offer a fixed payment that devotes more to principal and less to interest when rates are low and vice versa when rates are high.
Is the 5-Year Variable Mortgage Rate the Best Choice for Me?
To determine whether or not current 5-year variable mortgage rates are right for you, you need a good understanding of their advantages and disadvantages. Here we present the main pros and cons of 5-year variable mortgages:
PROS
• Variable rates are often lower than fixed mortgage rates.
• Most banks allow you to easily change your variable-rate loan into a fixed-rate loan if variable rates climb too high.
• A 5-year rate term gives you enough time to figure out whether it is wise to keep renewing at variable rates without forcing you into one loan for too long of a term.
CONS
• When the best 5-year variable mortgage rates are higher than fixed rates and you want to transfer to a fixed-rate mortgage loan, you often have to pay additional fees.
• It can be hard to make a budget with a variable mortgage because of frequent changes to your mortgage payment.
• In a rapidly growing economy, when job opportunities are abundant and wages are increasing, variable rates tend to be higher than during times of recession.
What Else Should I Know About 5-Year Variable Mortgages?
There are more facts that can help you make the final decision about getting a 5-year variable mortgage. For example:
• A small minority (less than 5 percent) of Canadians choose loan products that combine the features of both a fixed-rate mortgage and a variable-rate mortgage.
• Nearly one-third of Canadian homeowners have a variable-rate mortgage, and it is a product that has become more popular over the past few years.
• The first part of the twenty-first century has featured some of the lowest variable mortgage rates of all time.
• Whether they choose a fixed-rate mortgage or a variable-rate mortgage, most Canadians opt for a 5-year loan term.
• In the early 1980s, variable mortgage rates reached their highest levels in history because the prime rate averaged nearly 25 percent.
Get Your 5-Year Variable Mortgage
You have many different options for mortgage rates, 5-year variable rates included. If a 5-year variable mortgage is right for you, simply choose a loan rate on this page to apply for a mortgage.
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