Best Year Mortgage Rates
Best Variable Mortgage Rates
Variable-rate mortgages have outperformed for well over three decades. The best variable rates of all time have had discounts of one percentage point off prime rate. But even at a more modest prime minus 0.50%, they’ve handily beat fixed rates the majority of the time.
Don’t get too caught up in the statistics, however. Variable rates can easily cost more in a rising rate environment, especially when the upfront difference between fixed and variable rates is small at the time of origination.
Variable mortgages usually have payments that float with prime rate, but not always. Many lenders let you set your payment so it doesn’t move during the term. There are exceptions, however. If rates skyrocket, your lender can still raise a set payment to ensure you at least cover the interest due every month.
The best variable rate depends on the restrictions you can live with and the features you need. The lowest variable rates often come with high penalties for early termination and/or limitations on switching lenders before maturity.
The two most common floating-rate mortgages are the 3-year variable and the 5-year variable. Apart from having to renew more frequently, there’s no real disadvantage to a shorter term unless you think variable-rate discounts are going to shrink in the future.
Last but not least, remember that variable-rate mortgages require that you prove you can afford higher interest rates. Specifically, most lenders require that you show you can afford payments based on the Bank of Canada posted rate. That’s to ensure you can afford rising rates in the future.
One quick note: Our mission is to always list the lowest variable rates in Canada. If you happen to find one lower, please email us. Rate tips — from informants like you — help thousands of Canadian families save money every year at RateSpy.com.