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5-year variable-rate mortgage: What you need to know.

When signing a mortgage contract in Canada, homebuyers have many term and amortization options to choose from. One of the most popular options in Canada is the 5-year, variable interest rate mortgage term with a 25-year amortization period. This is just one of many potential mortgage structures Canadians can arrange with their mortgage lender. This page will review the different mortgage terms available to Canadians as well as the different rate structures they can select. We’ll also dive into the difference between fixed and variable rates, open and closed mortgages, and how to secure the best mortgage rate possible in Canada. If you’re ready to start looking for a home and a 5-year variable-rate mortgage, you can start your search by filling out the form above. If you’re looking to refinance or or renew your mortgage, don’t despair. We’ve got you covered. Just select the “Refinance” or “Remortgage” options in the form above.

Your questions about 5-year variable-rate mortgages, answered.

What is a 5-year variable-rate mortgage in Canada?

A 5-year variable rate mortgage is one of many available mortgage terms in Canada. Mortgage terms can come in a number of different structures and range from six months to 10 years. The 5-year, variable rate term mortgage has been known to save Canadians money over the long term, but it’s not the only option. In addition, Canadians can also choose between a fixed and variable rate mortgage.

When selecting a mortgage term and rate structure, it’s important to take a number of things into consideration. For instance, your financial situation and personal tolerance for risk will come into play when you’re deciding how long you want your term and amortization periods to last. Furthermore, a variable rate tends to be riskier than a fixed rate; more risk averse homebuyers may choose to go with the latter. However, variable rates have been proven to save Canadians money in the long run. So, if you’re looking for the best deal, a 5-year, variable-rate mortgage may be the way to go.

How do variable-rate mortgages work?

Variable rates are usually expressed as a function of the prime lending rate posted by banks, plus or minus a set amount based on the credit conditions at the time. For example, a variable mortgage advertised as ‘prime minus 0.5,’ means the interest rate would be whatever the posted prime rate is less than half a percent: if prime is 3%, your variable rate would be 2.5%.

The prime rate moves in conjunction with the Bank of Canada overnight rate. So when the Bank of Canada raises or lowers its lending rate, your variable mortgage moves up or down by the same amount within a few days.

With variable mortgage products your payments can be calculated in one of two ways:

Pay a set amount each month: The proportion of interest you pay changes based on the interest rate at the time. You can take advantage of today’s falling rate environment and pay down more of your principal while maintaining a constant payment.

Pay a certain amount of principal and interest: The amount you pay each month moves up or down as interest rates change.

What’s the difference between a 5-year variable-rate vs. fixed rate mortgage?

What is a 5-year variable-rate mortgage? A 5-year, variable rate mortgage refers to a mortgage term that renews every five years. This means that your mortgage contract is renewed with the remaining principal owed every five years at a new rate and a new amortization period. With this type of mortgage structure, the five-year mark is also an opportunity to increase your payments to potentially reduce your amortization period, change your payment frequency, or even change lenders. With a variable rate structure, your rate changes according to market conditions.

What is a 5-year fixed-rate mortgage? A 5-year, fixed rate mortgage is similar to a 5-year variable rate mortgage in a lot of ways. Similarities include that your mortgage contract renews at the end of the five-year term. At this point, you’ll also have the option to renew your mortgage contract at a new rate and reevaluate things such as your payment frequency and duration. If rates have dropped since you purchased your home, this also presents an opportunity for homebuyers to switch to a variable rate.

On, variable rates are historically lower than fixed rates. However, the comparison between 5-year variable rate mortgages and 5-year fixed rate mortgages on the site has been slim. See the graph below to learn how fixed rates compared to variable rates over a one-year period.

Average 5-year-fixed mortgage rates vs. average 5-year variable rates

MonthOur average variable rateOur average fixed rate

To secure the best 5-year variable mortgage rates, compare the market on today. 5-year variable rate mortgages are one of the most popular options on because of how competitive our partners’ rates are. To see the current rates for 5-year variable rate mortgages, visit our main mortgage page here.

What’s the difference between a 5-year variable-rate closed mortgage vs. open?

What is a 5-year variable-rate closed mortgage? A closed mortgage cannot be fully paid off, renegotiated or refinanced before the end of the loan term without a prepayment penalty being issued. These types of mortgages usually come with lower interest rates than open mortgages. While most closed mortgages will usually come with accelerated payment options of some sort, the lender will set the prepayment terms. Agreeing to a closed mortgage means that you’re bound by the loan agreement for the duration of the mortgage term. Furthermore, you can secure a 5-year closed mortgage in Canada with a variable rate or a fixed rate.

What is a 5-year variable-rate open mortgage? An open mortgage can be paid off at any time without incurring a penalty. However, most 5-year open mortgages in Canada have variable rates, which tend to be higher than that of closed mortgages. Luckily, homebuyers who choose an open mortgage but feel the fees are too high can move into a regular, fixed-rate mortgage at any time.

Where can I get a mortgage in Canada?

In Canada, homebuyers can secure a mortgage from several types of lenders. The most common place to get a 5-year variable rate mortgage are the Canadian banks. In addition, many Canadians receive mortgage loans with other financial institutions as well. These may include insurance companies, trust companies, loan companies, credit unions and caisses-populaires in Quebec. Many Canadians also choose to work with a mortgage broker. Brokers don’t lend money themselves, but rather sell mortgages from a wide range of different lenders on their behalf. When it comes to getting the best rate on a 5-year, variable-rate mortgage, a broker can have more insight into the market and may be able to get you a better deal. At, we work with Canada’s top brokers and banks to bring you the best deals on mortgage rates in the country. Start a form by choosing one of the options above above to be matched with one.

Where can I get the cheapest rate on a 5-year variable-rate mortgage in Canada?

Prospective homebuyers can secure a 5-year variable rate mortgage at Canadain banks, credit unions and a number of other lenders. However, the majority of borrowers go with A lenders like banks and other reputable financial institutions. Unfortunately, there isn’t one lender that offers the lowest rates on 5-year variable rate mortgages across the board. The best way to make sure you’re getting the best 5-year variable rate is to compare the market. can help with that. All you have to do is fill out a form with a bit of information about you and your home or the home you’re buying. In just a few minutes, you’ll be taken to the very best offers on 5-year variable rate mortgages from brokers and banks across Canada. You can even compare 5-year variable-rate mortgages specifically.

What’s the difference between a mortgage term and the amortization period?

Borrowers often confuse the mortgage term and amortization period. A mortgage term refers to the amount of time you’re committed to your loan contract before it’s up for renewal. This term can last anywhere from six months to 10 years, but the most popular choice among Canadians is a 5-year term. An amortization period, on the other hand, refers to the total amount of time it will take to pay down the outstanding balance on your mortgage loan. This amount may change if you choose to adjust your rate structure, payment frequency or other features of your contract when it comes up for renewal at the end of your term. The most common amortization period among Canadians is 25 years.

Is a variable mortgage rate the same as an adjustable mortgage rate?

No. While a variable rate mortgage and an adjustable rate mortgage sound similar, there are some key differences to note. With a 5-year adjustable rate mortgage, your interest rate changes according to market conditions. As the rate changes, though, your monthly payment will also change. With a 5-year variable rate mortgage, your monthly payments will not change for the duration of the mortgage term. If the prime rate goes up, a greater portion of the mortgage payment goes towards interest costs. If the prime rate goes down, more of the payment will go towards paying down the mortgage principal.

Is a variable mortgage rate the same as a floating mortgage rate?

Yes. A floating rate is another term for a variable interest rate. This means that the interest rate will fluctuate with market conditions. A 5-year mortgage with a floating rate is the same as a 5-year variable rate mortgage.

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