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

A 10-year fixed-rate mortgage is the longest mortgage term offered in Canada. It’s the ideal option for Canadians who desire stable mortgage payments over a long period. Ten-year fixed-rate mortgages provide protection from rising interest rates, offering peace of mind to risk-averse homebuyers. However, longer mortgage terms generally come with higher interest rates.

Longer mortgage terms are less popular among consumers. The majority of Canadians choose 3- or 5-year mortgage terms, which is what LowestRates.ca allows you to compare in our digital marketplace. However, we can connect you with a broker who can help you find 10-year fixed rate mortgage deals from top lenders in Canada

LowestRates.ca’s free, no-obligation quote tool can help you quickly compare mortgage rates from 75+ Canadian banks and brokers to find the one that’s right for you. Enter your postal code above and click “Get Started” to see available terms and mortgage rates.

Your questions about 10-year fixed-rate mortgages, answered.

What is a 10-year fixed-rate mortgage?

A 10-year fixed-rate mortgage consists of two components: the term and the interest rate. Let’s explore each in detail:

Ten-year term

The term is the period your mortgage contract is in effect. A 10-year fixed term mortgage commits you to regular payments over 10 years. Your interest rate will remain the same throughout the 10 years, as will the terms and conditions of your contract. Once the term ends, you’ll have the option to renew your contract or renegotiate it to obtain a lower interest rate. The renewal process repeats until you pay off your mortgage in full.

Fixed interest rate

Your lender will set the interest rate you pay on your mortgage. The rate can either be fixed or variable.

Fixed interest rates stay the same for the duration of the mortgage term. As a result, your payments will never change over the term, offering you a consistent payment schedule. On a 10-year fixed mortgage, your rate will remain locked in for 10 years, with each payment settling the same proportion of the principal and interest. Interest rates on 10-year fixed mortgages tend to be higher than rates on variable mortgages.

Variable interest rates can change during the mortgage term. They fluctuate based on your lender’s prime rate, which is influenced by the Bank of Canada's rate decisions. Rates on variable mortgages are usually lower than rates on fixed mortgages. However, if interest rates rise, you’ll wind up contributing more of each payment to cover the interest rather than the principal.

Closed vs. open mortgage

When it comes to making payments, understanding the difference between a closed mortgage and an open mortgage is also crucial.

Closed mortgages: These mortgages have restrictions on the amount of extra money you can put toward your mortgage balance. A closed 10-year fixed-rate mortgage means you're locked into a predetermined payment schedule for 10 years, with no ability to increase your payments. Any excess payments you make during the term will trigger penalties. If the option to make additional payments is essential to you, a closed mortgage is likely not the best option. In Canada, the rates on 10-year fixed-rate closed mortgages are typically lower than rates on open fixed-rate mortgages for the same term.

Open mortgages: These mortgages provide you with the flexibility to make extra payments with little to no penalty. An open 10-year fixed-rate mortgage allows you to increase your regular payment amount, contribute periodic lump-sum payments, and easily refinance to take advantage of lower rates. In Canada, the rates on 10-year fixed-rate open mortgages are higher than rates on closed fixed-rate mortgages for the same term. Lenders set higher rates to compensate for the risk of borrowers paying off their mortgage early, which would affect the lender’s revenue stream.

What are the fees involved with a 10-year fixed-rate mortgage?

While securing a low interest rate is feasible, avoiding the fees that accompany a mortgage is not. The best 10-year fixed-rate mortgage with no fees payable doesn’t exist, so you should be prepared to cover these extra expenses.

Below is a breakdown of some of the most common fees you’ll encounter:

Mortgage default insurance: In Canada, if your down payment is less than 20% of your home’s selling price, you must purchase mortgage insurance. The insurance protects the lender in the event you default on your mortgage. Mortgage insurance can be purchased from the government’s Canadian Mortgage and Housing Corporation (CMHC), or private insurance companies Sagen and Canada Guaranty. You have the option of bundling the insurance premiums with your mortgage or paying them upfront as a lump sum.

Provincial sales tax (PST): Depending on where you live, you may have to pay PST on your mortgage default insurance premiums. You must pay the tax when you close on the purchase of your home. PST is charged in Ontario (8%), Quebec (9.975%) and Manitoba (7%).

Interest adjustment costs: If you close on your home's purchase in the middle of the month, your lender may charge you for the interest that accrued between the closing date and your first mortgage payment.

Appraisal fee: Your lender may hire an appraiser to assess your home’s value, which you’ll be responsible for paying. Since your home serves as collateral for the mortgage, your lender needs assurance that you’re not borrowing more than what the home is worth.

Prepayment penalty: If you’ve opted for a closed mortgage, you’ll be subject to penalties should you make extra payments. If this doesn’t sound appealing, you can choose an open mortgage instead, which permits you to contribute more payments.

The above fees relate to your mortgage. There are additional fees that accompany the homebuying process, which you’ll also be responsible for paying. These may include land transfer taxes, legal costs, and property taxes.

As mentioned above, finding the cheapest 10-year fixed-rate mortgage with no fees isn’t possible. Still, with some careful planning, you can minimize the impact of these fees on your wallet.

Where can I get the cheapest rate on a 10-year fixed-rate mortgage in Canada?

Though there isn’t one specific Canadian bank that offers the lowest rates on a 10-year fixed mortgage, we can provide a few tips on how to increase your chances of securing a great deal.

Lenders will review your financial profile to determine whether they will grant you a mortgage, so ensure you maintain a high standard in the following areas:

  • Your gross debt service ratio is 35% or less and your and total debt service ratio is 42% or less
  • You can pass the mortgage stress test
  • You have a high credit score
  • You can put down a decent down payment (at least 20%)
  • You have a steady income

The more criteria you meet, the greater your chances of qualifying for the best 10-year fixed-rate mortgage rates from Canadian banks. Suppose you rank poorly in a few of these areas. In that case, your mortgage options may be more limited, or you might be charged a higher interest rate.

Should I use a mortgage broker or a bank?

Most homebuyers in Canada get a mortgage in one of two ways: going to a bank or through a mortgage broker. There are advantages and disadvantages to both routes.

Acquiring a mortgage from your bank has a certain level of trust — you may be more comfortable dealing with an organization you’re familiar with. If you're a long-time loyal customer, you may be able to flex considerable negotiating power, as well. Also, keeping all your accounts under one entity makes it easier to manage bills and payments.

On the downside, banks only offer their own mortgage products, so you can’t really do a thorough comparison of current 10-year fixed mortgage rates on the market. You may also find it harder to meet the bank’s mortgage lending criteria, particularly if you possess a low credit score or lack a steady income.

Looking at 10-year fixed mortgage rates via a broker is also a great option to explore. Unlike a bank, mortgage brokers have access to a wide variety of lenders; they can present many opportunities to you tailored to your specific needs and preferences. Mortgage brokers may also offer you discounted rates, as many of them receive volume discounts from lenders.

So, what is the best way to get a 10-year fixed-rate mortgage? Should you choose your bank or use a broker? The answer is it depends on your circumstances and preferences. Also, consider who offers the lowest rates and the most flexible mortgage features. LowestRates.ca can help you save time, effort, and money by comparing mortgage rates from 75+ top Canadian banks and brokers.

What other mortgage terms are available?

Your mortgage term refers to the length of time you’re locked into your mortgage contract. Prepayment privileges, refinancing options, and other features also remain in effect for the term.

There’s a variety of mortgage terms available for borrowers. The shortest term in Canada is six months, and the longest is 10 years.

The most popular type of mortgage in Canada is a 5-year fixed rate mortgage. It’s the ideal term for most homeowners as it provides stability and predictability over a reasonable time frame.

Short-term mortgages (those less than four years) are a great choice if you’re planning to stay in your home for only a brief period, or if you anticipate your financial situation will change soon due to circumstances such as a job promotion or inheritance.

Interest rates on short-term mortgages are generally lower than rates on long-term mortgages, as lenders face less risk recouping their money. However, monthly payments can be higher, given the condensed time frame.

Long-term mortgages (longer than four years) are a good fit if you intend to live in your home for an extended time and your finances are stable. Securing the best 10-year fixed mortgage rate in Canada can provide you with peace of mind, as it offers a predictable payment schedule for many years. However, should you wish to break your mortgage to refinance, you may face steep financial penalties.

Interest rates on long-term mortgages are typically higher than short-term mortgages, as lenders face greater uncertainty in recouping their funds. On the flip side, your payments will be much smaller, as they're spread out over many years.

What is the difference between a 3-year and 10-year fixed-rate mortgage?

  • Rates for a 3-year mortgage term will be lower than a 10-year mortgage term
  • Payments will be larger on a 3-year mortgage term than a 10-year mortgage term
  • The mortgage contract will end after three years

What is the difference between a 5-year and 10-year fixed-rate mortgage?

  • Rates for a 5-year mortgage term will be lower than a 10-year mortgage term
  • Payments will be larger on a 5-year mortgage term than a 10-year mortgage term
  • The mortgage contract will end after five years

Is a decade-long mortgage term the right choice for you? If so, what is the lowest rate on a 10-year fixed-rate mortgage you qualify for? To find the answer, be sure to connect with a broker through our mortgage quoting tool. Currently, LowestRates.ca only offers the ability to compare 3- or 5-year mortgages. However, we can connect you with a mortgage broker who can show you today's 10-year fixed mortgage rates.

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