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.

  1. Last time I dealt with a broker, they gave me a blend and extend to consolidate some debt with the bank I was with at the time. I was told I had to get a 5 year mortgage, but I wanted 3 years or less.

  2. Hi Luc,
    Thanks for the message. We try to avoid posting non-publicly available rates on CMT because a lot of lenders don’t like it and because it’s impossible to determine product suitability beforehand, which is a duty of ours as mortgage planners.
    The best bet is to talk with a mortgage planner and tell them what you’re looking for. Or you can give us a call/email if easier.
    Have a nice weekend,

  3. Mike S,
    When doing a blend and extend you have to select a term that is equal to or longer than the amount of time left on your current loan. So if you had over three years left, you would have had to take at least a 4 year mortgage. If the lender doesn’t offer a 4 year product, then you would have had to take their 5 year.

  4. That was the issue. I had less than 1 year left. I told him I wanted a 1 year or 6 month, but he said, “no, you have to get 5 years”. I thought that was TD’s policy so I accepted it.

  5. Sorry, in that case I can’t suggest anything to explain why he said that. You’d have to ask him for an explanation…

  6. Brokers are typically paid more when the client takes a longer term. The broker you dealt with may have had an incentive to get you to lock in longer. You should have at least got a 2nd opinion.

  7. Mike S.
    There are a lot of valid reasons you could have been put in a 5 year and it is foolish to speculate on the bank or brokers intentions here.
    Go to the source and ask your broker the reasoning. If that reasoning is not adequate then speak to FSCO or whoever your provinces regulator is.

  8. I got a mortgage with Merix right now and I am currently getting Prime – .6 which is really turning out to be a great deal for me. With prime falling the way it is my mortgage is at 2.4% now a days. I don’t know how you can beat that.

  9. Hey John, Appreciate the kudos. Your site’s pretty cool in its own right. I especially enjoy “High-Roller Harry” and “Shannon Shop-a-lot,” who I think you should introduce to each other as they’d be a perfect match. – Rob

  10. Jeremy,
    You definitely have a great deal there. My wife and I also lucked out on our deal last year through the help of a mortgage broker. We’re paying prime -0.9% and it’s good for another 4 years so I think we’re pretty happy with our mortgage payments. We just happened to sign the mortgage a week before they stopped offering prime -0.9%. The lender was one of only 2 left that still hadn’t switched to prime -0.6% at that time. Most of all, I’m happy that the deal had no compromise on other features which were important for us. We can pay back 25% each year and increase our payments by up to 25% if we would like to do so. We can skip a payment when needed or convert to a fixed rate (yeah right) at any point. Unlike most mortgages, we didn’t need to include property taxes in our payments. Needless to say that we’re pretty happy with our decision to visit a broker to find out about mortgage products offered by companies we didn’t know.

  11. Merix is offering at 3.75% / 3yr fixed – doesn’t seem to be posted, but the deals are on – no time travel required.

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