Find the best 5-year variable open mortgage rate

The '5' in a 5-year mortgage rate represents the term of the mortgage, not to be confused with the amortization period. The term is the length of time you agree to a particular mortgage, while the amortization period is the total amount of time it will take you to pay off your mortgage. The term acts like a reset button on your mortgage, at which point you must renew the mortgage at a rate available at the end of the term. So, for example, a typical mortgage has a 5-year term and a 25-year amortization period.

When the mortgage rate is 'variable' it means that the rate (%) fluctuates with the market interest rate, known as the 'prime rate'. This is different to a fixed rate, which is set for the duration of the term. A variable rate is determined by its relationship to prime.

For example, if your 5-year variable mortgage rate is Prime + 1% and the current prime rate is 3%, then your current interest rate will be 4%.

You can think of the difference, or spread, between variable mortgage rates and fixed rates as the price of insurance that mortgage costs will not increase in the next five years, more or less. The advantage of fixed rate mortgages is that you know exactly how much your mortgage payments will be regardless of whether rates rise or fall. You can, essentially, set it and forget it. This eases the budgeting anxiety that may follow a variable rate mortgage.

When interest rates are low, and the spread between shorter-term rates and the 5-year fixed mortgage rates is less significant, it is typically recommended that you lock in the 5-year rate. The longer term offers stability and, because rates are historically low, the chances of rates decreasing further with a variable rate are greatly reduced.

On the other hand, as is the case with all fixed mortgage rates, there is the potential to pay higher interest when variable rates are low, and, examined historically, variable rates have proven to be less expensive over time.

An open mortgage gives you a lot of flexibility to increase your mortgage payments, either as a lump sum or by increasing your regular payments. This lets you pay down your mortgage faster, or pay the whole thing off quickly. You might use this feature if you sold your home or received a large sum of money, such as from an inheritance.

The opposite of an open mortgage is a closed mortgage. Closed mortgages limit the amount by which you can increase your payments, and will charge you penalties if you choose to do so. While there's less flexibility in closed mortgages, you will pay a lower rate on a closed mortgage than an open mortgage.

Open mortgages are less common than closed mortgages in Canada. This is because open mortgages come with higher rates, which are only worth paying in specific, and reasonably uncommon, situations.

We make it simple to see current mortgage rates from all of Canada’s leading mortgage providers in one place. We have rates from the big banks, smaller lenders, as well as mortgage brokers across the country. This makes it easy to see who offers the best rates in Canada in real time, at no cost to you.