3 Year Fixed Rate Mortgage

Compare The Best 3 Year Fixed Mortgage Rates To Lower Your Monthly Payments

Canadians who want the peace of mind of a fixed mortgage rate for a short period benefit from  3 year fixed mortgages. The 3-year fixed term is perfect for those who plan on selling their house in less than 5 years. A 3-year fixed mortgage binds you to pay a set interest rate and monthly payments for the duration of your contract (3 years). At the end of this agreement, you may choose a new mortgage. To get the most out of your mortgage, consider the benefits and drawbacks of a 3 year fixed rate.

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What Is A 3-year fixed mortgage?

3 year fixed mortgages provide the stability of a longer mortgage and lower rates than you would find in shorter terms. A 3-year fixed mortgage is a contract that binds you to pay the set interest rate and monthly payments for three years. The interest rate during this term remains consistent with no fluctuations. 

In a 3-year mortgage (meaning the term, not amortization), at the end of those three years you must refinance or renew your loan to gain access to better rates. Homebuyers should be aware that on a 3-year term, the lender will use standards for approving 5-year mortgages to prevent financial risk.

How Are Rates Determined On 3 Year Fixed Mortgage Rates?

The rates for 3 year fixed mortgage loans depend on a number of factors. These include the country’s economic situation, your lender’s strategy and what is going on in the market at any given time. For an indication of how these might change and to get a better idea of their relative rates, it is possible to track these changes using expected earnings offered on government bonds.

How Much Can I Save Comparing 3 Year Fixed Mortgage Rates?

Your mortgage might be the single largest financial commitment you’ll ever make in your life. One lender may offer you a higher rate than another one might. Even saving 0.25-0.50% on an interest rate can still save you a few thousand over the 3 year term of your mortgage loan. It’s recommended to compare rates from multiple lenders and select the lender that offers you the lowest rate to save the most money on your mortgage loan.

Benefits Of A 3 Year Fixed Mortgage Rate

The typical rate for the 3-year repayment contracts is less than that for 5-year plans. In case you think rates are likely to fall, you can benefit from lower interest rates after your contract ends when it’s time to renew.  On the other hand, if you predict that rates are likely to rise, your fixed low-interest might be worth it.

You have the flexibility to choose more favorable interest rates before the end of your amortization period without incurring any penalty. Choosing a 3-year fixed mortgage with the capacity to fix rates for the next three years give you access to competitive interest rates as well as protection against rate increases. Locking into a shorter mortgage contract will protect you from paying high prepayment penalties.

Drawbacks Of A 3 Year Fixed Mortgae Rate

You are more at risk of having to renew or refinance into high interest rates on 3 year fixed mortgage rates than with a 5 year fixed mortgage rate. When interest rates on your mortgage are rising quite high, you can seek to break the contract for early release and incur penalties. Frequent renewals can be a hassle since it usually requires frequent documentation, rate research and renegotiation.

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The Bottom Line

If you plan to fully pay off your mortgage after three years or more, a 3-year fixed term is best for you. If not, lock in savings rates with a longer loan term. If you expect to upgrade your home in the next few years, buying a new mortgage with shorter terms will save you money on penalties. One lender may offer you a higher interest rate than another, but that doesn’t mean they’ll provide the best deal. To save money on your mortgage, compare rates from multiple lenders and select the one with the lowest rate for your 3-year fixed term.

Compare Rates and Plan Your Future!

We offer competitive rates to help you find a consistent monthly payment. A variety of loan solutions can be used for any financial situation. You deserve the best product, and we will work with you to make sure you get it! Contact us today so we can start planning your future together!