Variable Rate Mortgages

Variable Rate Mortgages in Canada

Canada has consistently been considered one of the best places to live in the world and it attracts a lot of attention from internationals and nationals alike to its housing market. The country currently has one of the hottest housing market in North America and a lot of people are taking notice. As such, investments are on the rise in the country. Variable rate mortgages have become increasingly popular for home-buyers and others who are interested in investing in the country. With that searching for the best variable rate mortgages can be strenuous.

There are a lot of different options to select from and the time spent gathering the necessary information can be time consuming. There are online tools that can be beneficial when deciding on variable rate mortgages. Smarter Loans has an online directory which can list all the providers in Canada and their rates for variable rate mortgages. It allows for the ease of comparing and finding one that fits your needs best. With the online directory, the necessary information can be provided in a clear fashion so that the variable rate mortgage that suits you best can there for you to select.

Once you have chosen the provider that suits you best, simply click on “Apply Now” and it will take you to a page where you can start the application process. Follow the instructions and answer a few questions provided. It will confirm that you may qualify and then you are set. Alternatively, pre-apply with Smarter Loans and we will select a provider and the variable rate mortgages that best fit your preferences.

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

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Top Variable Rate Mortgages Providers in Canada

Interest Rate
$15,000 and Up
$20,000 - $10 Million
6 months - 5 years
$10,000 and up
Varies (Home Equity Loans)
12 Months
$20,000 - Unlimited
12 to 60 months
$50,000 and Up
1 - 10 years
$50,000 and up
Rates starting at 5.44%
5 years

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


If you’re looking for the lowest possible mortgage rate and don’t mind taking on a bit more risk, then a variable rate mortgage might make sense for you.

As its name suggests, with the variable rate mortgage, the mortgage rate is variable – it can change during your mortgage term. The rate on variable mortgages is based on prime rate, the rate lenders offer to their most creditworthy clients, plus or minus a spread.

A lender’s prime rate is influenced by the Bank of Canada’s overnight lending rate. When our central bank changes interest rates, the banks tend to follow suit by changing prime rate by the same amount.

As mentioned, if prime rate were to change, so too would your mortgage rate. For example, using the same example from earlier, if prime rate went up 25 basis points to 4.20%, then your mortgage rate would also go up by 25 basis points to 3.60%. Likewise, if prime rate were to go down by 25 basis points to 3.70%, then your mortgage rate would also go down by 25 basis points to 3.10%.

With some variable rate mortgages, when prime rate changes, your mortgage payment will also change. For example, if prime rate goes up, your mortgage payment will go up as well. However, with variable rate mortgages offered by other lenders, your mortgage payment may stay the same (although more of your money will go towards interest and less towards principal).

Subprime Mortgages in Canada

Why You Might You Choose a Variable Rate Mortgage


If you want to save money on your mortgage and the possibility of higher mortgage rates doesn’t keep you up at night, then variable rate is worth serious consideration.

5-year variable rate mortgages are almost always offered at a lower mortgage rate than 5-year fixed rate mortgages. The lower mortgage rate up front can help you save some decent money in mortgage interest over your mortgage term and the life of your mortgage.

With a variable rate mortgage, you usually have the ability to lock in your mortgage at any time during your mortgage term. You might lock in your mortgage if mortgage rates have risen (or you anticipate them rising). You can typically lock in to a fixed rate of equivalent length to the time remaining on your variable rate mortgage. For example, if you have 3 years left on your variable rate mortgage, you could lock into a 3-year fixed mortgage. This can protect you from further rate increases.

Is there a chance you might have to break your mortgage? Then again, variable rate mortgages offer an advantage over fixed rate mortgages. Variable rate mortgages tend to come with less onerous mortgage penalties. Typically, you’ll only have to pay a penalty of 3 months of interest for breaking your mortgage before the end of its term.

Lastly, if you plan to pay off your mortgage in a short time period (less than 5 years), then variable rate can make sense as well since you can take advantage of the lower rate with less risk (since you’re paying off your mortgage sooner rather than later).

By The Numbers:

For homes bought with a mortgage in 2018, 30% of homebuyers chose variable rate mortgages.

Source: Mortgage Professionals Canada

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