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4-year fixed-rate mortgages in Canada: what you need to know.

Are you the type of person who prefers to know exactly what your mortgage payment will be for the next 48 months? Do you also like the idea of being able to renew your mortgage in less than five years because you believe that interest rates will remain low?

If so, then a 4-year fixed rate mortgage may be the ideal solution for you.

Most Canadian consumers choose 3 or 5-year mortgages. Because of this, there are the mortgage terms LowestRates.ca can compare in our digital marketplace.

However, we can still help you get a 4 year fixed-rate mortgage. LowestRates.ca will connect you to a broker who can compare 4-year fixed rate mortgages from multiple Canadian lenders with you.

To get connected with a broker, we recommend applying for either a 3 or 5-year mortgage on our site. Just indicate whether you’re renewing, refinancing or taking out a brand-new mortgage. Next, click the pink ‘Get Started’ button. In three minutes or less, we’ll connect you with a bank or broker who can run a 4-year fixed mortgage rates comparison.

Many mortgage-seekers have questions like, ‘What is the best 4 year fixed rate mortgage’ and ‘What is the lowest 4 year fixed rate mortgage.’ Keep scrolling to learn the answers to these questions and more.

Find the best and lowest 4-year fixed mortgage rates in Canada today with help from LowestRates.ca.

Your questions about 4-year fixed-rate mortgages, answered.

What is a 4-year fixed-rate mortgage?

To understand what a 4-year fixed rate mortgage is, it helps to break it down into its two key parts.

What is a mortgage ‘term’?

In this particular case, the term is 4 years long. The term refers to how long your mortgage contract and interest rate is for. Once you have reached the end of your 4-year term, you will need to renew your mortgage. If interest rates are lower in 4 years, you can renegotiate a better rate with your lender.

What does ‘fixed rate’ mean?

The rate is referred to as ‘fixed’ because the interest rate on your mortgage will be the same for the full 4-year term. In comparison, if you opt for a variable rate, then your mortgage rate would fluctuate whenever the Bank of Canada raises or lowers its benchmark lending rate.

Why do people pick fixed mortgages over variable ones? If you’re the type of person who prefers to know what your monthly mortgage payment amount will be for the next 48 months then you’ll probably choose to go with a 4-year fixed rate mortgage.

Variable mortgage rates are usually lower than fixed mortgage rates. A variable mortgage rate may be your preferred option if you think interest rates are going to remain low (and even go lower), and you don’t stress or worry about not knowing what your mortgage payment amount will be each month.

One more thing to keep in mind: when you sign up for your 4-year fixed rate mortgage you will also need to decide whether you would like a closed mortgage or an open mortgage. Here are the differences and why you might decide to pick one over the other.

Closed mortgages. Closed mortgages generally offer the lowest interest rate vs. open mortgages. This is because they place limits on how much extra money you can pay on top of your monthly mortgage payment.

Open mortgages. These types of mortgages allow you to make larger monthly mortgage payments without being penalized for it which gives you the opportunity to pay off your mortgage sooner. This added flexibility comes at a slight cost however as usually the interest charged on an open mortgage is slightly higher.

A mortgage broker can help you decide which is best for you: the current 4-year fixed closed mortgage rates in Canada vs. the current 4-year fixed open mortgage rates in Canada.

Four-year mortgage deals aren’t taken out as frequently as 3 or 5-year ones and we aren’t able to offer a comparison service for 4-year mortgages at this time. However, it’s still possible to find the best 4 year fixed rate mortgage deals online with LowestRates.ca.

By applying for either a 3 or 5 year fixed rate mortgage, we will connect you with a broker who will pull up rates on 4 year mortgages from a multitude of Canadian lenders. A mortgage broker can help you find the best 4 year fixed rate mortgage deals.

What is the interest rate on a 4-year fixed-rate mortgage?

Want to know what the rates on a 4-year fixed-rate mortgage are today? We recommend speaking with a mortgage professional. A broker will be able to pull mortgage rates from various Canadian lenders for 4-year fixed-rate mortgages and find the best lender for you.

Another strategy that homebuyers fall back on to determine the answer is to review historical 4-year fixed mortgage rates in Canada.

However, Canadians tend to favour 3 or 5-year mortgages over 4-year terms, so historical rates for the latter are hard to find. However, a mortgage broker has access to more data and should be able to show you trends for 4-year mortgage rates.

What are the fees involved with a 4-year fixed-rate mortgage?

The cheapest 4-year fixed-rate mortgage would be one with no fees. Unfortunately, though, all mortgages come with fees. Here’s what you can expect:

  • Mortgage broker fees: If you secure your 4-year fixed term mortgage through a broker, you’ll be responsible for paying them a finder’s fee. If you are a subprime borrower (meaning you have a low credit score or need a high ratio mortgage), you may be asked to pay another fee upfront, which protects the broker in case you end up not qualifying for a mortgage.
  • Mortgage default insurance: In Canada, if your down payment is less than 20% of the home’s sale value, you need to purchase mortgage insurance from the Canadian Mortgage Housing Corporation. Mortgage insurance premiums are folded into your monthly mortgage payments and are intended to protect your lender in case you default on your mortgage.
  • Provincial Sales Tax (PST): In some provinces, a Provincial Sales Tax (PST) is tacked on to your mortgage balance and has to be paid when you close on the home.
  • Interest adjustment costs: This fee can come into play if you close on a house in the middle of a month. If that happens, your lender may charge you for the interest accrued before you actually pay your first full mortgage payment.
  • Appraisal fee: Part of the mortgage approval and homebuying process includes an independent appraisal of your home, to see if it meets your lender’s lending criteria. This cost falls to you. This is one reason why even the best 4-year fixed rate mortgages won’t come with no fees payable.
  • Prepayment penalty: If you have a closed mortgage, you’ll be charged a fee if you make extra payments. If you plan to make more payments than just the monthly one, or if you plan to make a larger payment than what’s required each month, you should opt for an open mortgage instead of a closed mortgage.

When it comes to finances no one likes surprises. So when you’re shopping for 4-year fixed mortgage rates at Canadian banks, lenders, mortgage brokers, and mortgage companies be sure to ask your lender to clarify all of the fees that are associated with the mortgage they are offering you. And, if you haven’t done so already, make sure you account for the other fees you’ll have to pay as part of the homebuying process (i.e., legal costs, property taxes, and land transfer taxes).

Where can I get the cheapest rate on a 4-year fixed-rate mortgage in Canada?

Getting the cheapest 4-year fixed rate mortgage you can depends a lot on you. Lenders are more likely to offer you their lowest mortgage rate if your profile suggests that you will be a low-risk borrower that they can count on to make their mortgage payment on a consistent basis. So how can you ensure that lenders see you as an attractive candidate for a 4-year fixed-rate mortgage with them? By meeting the following borrowing criteria:

  • Your Total Debt Service and Gross Debt Service ratios are 32% and 40% or under, respectively.
  • You can pass the mortgage stress test.
  • You have a high credit score.
  • You have a decent down payment and you can prove it’s not borrowed from a personal loan company.
  • You have a steady income.

If you meet all of the above criteria you shouldn’t have any issues getting the best 4-year fixed rate mortgage being offered by any mortgage lender. If you only check off some of the items above it’s more likely that lenders will only offer you a higher mortgage interest rate and in some cases they won’t offer you a mortgage at all.

What other mortgage terms are available?

The mortgage term defines how long you’ll be locked into your mortgage contract. The contract stipulates how interest will be calculated and whether you will have any prepayment privileges.

After the term ends, you will be able to renegotiate your mortgage contract (also called renewal). It takes many terms to pay off a mortgage in full.

Five-year fixed-rate mortgages are the most popular term length for mortgages in Canada. Five years isn't too long nor is it too short; it lends a feeling of stability to many Canadian homeowners. But there are reasons why you might want to consider a mortgage term of a different length.

There are short-term and long-term mortgages. Anything below four years is considered a short-term mortgage and anything beyond that is a long-term mortgage. The shortest mortgage term is six months and the longest is 10 years.

Interest rates tend to be lower on short-term mortgages — that’s because lenders can bank on getting their money back relatively soon, so they are taking on less risk.

A long-term mortgage can provide peace of mind, but you do sacrifice flexibility. If you end up wanting out of your mortgage to seek a lower interest rate through refinancing, it will come at the cost of hefty fees.

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