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3-year Fixed Mortgages

3-Year-Mortgage There are some amazing deals right now on 3-year fixed mortgages.

In some cases, like with Merix Financial’s latest promotion, they’re at or below most 1-year and variable rates.  That doesn’t happen very often.

3-year mortgages seem to be the oft forgotten term, though.  Only 5-10% of people get them.  People tend to gravitate to 5-year terms instead–which are favoured by 61% of Canadians. 

That said, the research suggests that 3-year terms may be worth a deeper look.  For one thing, CAAMP data shows that folks get a new mortgage, roughly speaking, every 3 1/2 years.  So a 5-year term, in this case, is adding little value.

Furthermore, history has shown that shorter terms tend to save borrowers more interest over the long-run because of the bigger rate premiums built into longer-term mortgages.  In general, the more frequently you can negotiate your mortgage, the greater the likelihood you’ll get the best possible deal.

Therefore, if you’re looking at options for your next mortgage, consider if it’s worth paying 1/2%-3/4% more for the two years of extra certainty built into a 5-year fixed.  (For some homeowners it is)  Otherwise, at the current rates, a 3-year may just be your cup of tea.