Fixed Rate Mortgages

In Canada, fixed rate mortgages have proven to be immensely beneficial and are often referred to as a “vanilla wafer”. Fixed rate mortgages are fully amortizing mortgages where the interest rate on the note remains the same throughout the term of the loan. Since there are so many different mortgage companies, there are various options to consider when thinking about fixed rate mortgages.

Depending on what you obtained your mortgage for in the first place, fixed rate mortgages are generally more expensive than regular adjustable rate mortgages. With that being said, if you are interested in a fixed rate mortgage, Smarter Loans is able to help you acquire one in an efficient manner. In Canada, fixed rate mortgages is made simple by Smarter Loans. We are committed to helping you find a mortgage company that doesn’t just approve you for any fixed rate mortgage, but the fixed rate mortgage that best applies to your situation and unique set of needs. Fixed rate mortgages are very common for purchasing homes over 15 or 30 year terms. The reason being that they are less subject to the effect of inflation over time and can be a much more consistent form of repayment.

If it’s a mortgage that you are interested in, all you need to do is scroll down and select the fixed rate mortgage that best serves your unique needs, then click “apply now” in order to proceed to a brief online application. If the information laid out is overwhelming or confusing, you can also alternatively pre-apply with Smarter Loans and we’ll connect you with a mortgage company that offers a fixed rate mortgage that we determine to be compatible to your needs.

We can help connect you with the top fixed rate mortgage providers in Canada.

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Top Fixed Rate Mortgages Providers in Canada

Company
Amount
Interest Rate
Reviews
Terms
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Starting at 2.90%
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$50,000 and Up
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$50,000 - Unlimited
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Varies

What is a Fixed Rate Mortgage and How Does it Work?

 

If you’re buying a home for the first time or the thought of higher interest rates keep you up at night, then fixed rate mortgages may be ideal for you.

With a fixed rate mortgage, your mortgage payment and rate are fixed (stay the same) during your mortgage term. That means if you sign up for a 5-year fixed rate mortgage at 3.49%, then your mortgage rate will remain 3.49% for 5 years (provided you don’t sell the property and break your mortgage).

Unlike variable mortgage rates, which are based on a lender’s prime rate, fixed mortgage rates typically move based on the bond market. Government bond yields and fixed mortgage rates have a direct relationship – when government bond yields go up, fixed mortgage rates of a similar term length go up and vice-versa.

Although you’re protected from higher mortgage rates during your mortgage term, you can still face interest rate shock upon renewal. If fixed mortgage rates are a lot higher when you’re renewing your mortgage, you could be forced to put more of your money towards your mortgage on a monthly basis.

Why You Might Choose a Fixed Rate Mortgage


The main benefit of choosing a fixed rate mortgage is peace of mind. As mentioned, you don’t have to worry about your mortgage rate going up during your mortgage term. This makes budgeting a lot easier. You’ll know exactly what your mortgage payment will be for the next 5 years (or however long your mortgage term is). This especially comes in handy for first-time homebuyers who may have stretched themselves financially to afford a home. You can budget for your mortgage payments, utilities, property taxes and all other expenses that come with owning a home. (Although you’ll typically pay a higher mortgage rate with fixed rate, the added security that comes with “locking in” may be worth it to you.)

Are you planning to stay in your home for the long-haul? Then a fixed rate mortgage can make sense. You won’t need to worry about your mortgage rate or payment changing during your mortgage term.

Although 5-year fixed rate mortgages are the most popular mortgage in Canada, there’s nothing stopping you from locking in for 7 or even 10 years, if you’re concerned rates will be a lot higher in the future.

Just a word of caution – if you think there might be a chance you could break your mortgage during its term, you might think twice before choosing a fixed rate mortgage. That’s because fixed rate mortgages tend to come with higher mortgage penalties than variable rate mortgages. You’ll typically pay the greater of 3 months of interest or something called the interest rate differential (IRD). If mortgage rates are a lot today compared to when you first signed up, you could face quite a hefty mortgage penalty.

By The Numbers:

For homes bought with a mortgage in 2018, 68% of homebuyers chose fixed rate mortgages.

 

Source: Mortgage Professionals Canada

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Additional Useful Readings


Types of Fixed Rate Mortgages offered:

  • First Mortgage
  • Residential Mortgage
  • Second Mortgage
  • Commercial Mortgage
  • Mortgage Refinancing
  • Home Equity Line of Credit
  • Fixed Rate Mortgage
  • Debt Consolidation
  • Variable Rate Mortgage
  • Cashback Mortgage
  • First Time Homebuyers
  • Construction Mortgage
  • Self Employed Mortgages
  • Bridge Financing

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