How 5-year Variable Mortgages Work

Most investors in Canada prefer the 5-year variable rate mortgage.


  • Statistics show that borrowers typically pay lower total interest amounts in the long run if they opt for variable mortgages given that rates have been dropping in the last 30 years.
  • You’ll have the flexibility to refinance before the end of the term with no penalty or more economical penalty.


  • If the market interest rates are on the uptrend, you’ll pay higher rates of interest.
  • Most lenders are open to offering variable mortgages only to borrowers who can provide assurance that they can honor payments according to the 5-year fixed interest rate mortgages based on the benchmark 5-year rate as laid down by the Bank of Canada. They’ll need this assurance in case interest rates soar and you’ll need a much higher than average debt to loan ratio.