I'm often asked what length of mortgage term is "the best", and it's simply impossible to give a one-size-fits-all answer. The right term for your mortgage should be a balance of rate and risk, and most importantly should leave you sleeping soundly at night. The easy answer is:


The shorter the term, the more you may have to worry about rates rising when you reach your mortgage renewal. 


Most people worry about interest rate fluctuations and therefore will tend to gravitate towards a long, fixed interest rate term (Find a comparison of Fixed vs. Variable Rates HERE). Longer terms give you the benefit of knowing your payment/rate stays the same during your term, but at the expense of a higher interest rate overall. This is why it's important to get good advice before making this commitment/choice. Terms can vary from as short as 6 months all the way up to 10 years, with 5 year terms being smack in the middle and the typical choice for most Canadians, although I'm not entirely sure why...


“Internal lender statistics suggest that greater than 60% of mortgages will be paid out or restructured at an average of 36 months,” Dustan Woodhouse, DLC Canadian Mortgage Experts broker, told Canadian Mortgage Trends.

If the statistics show that more than 60% of clients will break their mortgage before 5 years, why do we keep choosing 5 year terms? 


It may be that it's simply the 'comfortable' choice. Or it may be that clients aren't aware of the large penalties often faced with fixed rate mortgage terms. When the average penalty for a fixed rate term could easily be 4-5% of your mortgage balance, it's worth thinking about how long you want to commit for. This may be why more and more borrowers are choosing variable rate mortgages lately, which come with a much smaller penalty (read more HERE).


Looking at the rate sheets it is tempting to think that the lowest rate is the best decision, however as with any mortgage choice, rate is not always the most important factor!


Before committing to that long mortgage term, ask yourself a few questions:


  • How does this fit into my life? 
  • How does it fit into my long-term goals and short-term plans? 
  • Am I comfortable committing for this length of time?
  • What are the potential penalties/prepayment fees if I break the term early?

The most important thing is to be comfortable and fully informed in making your decision, that’s why I always suggest meeting with a qualified Mortgage Broker to ensure that you make the right decision for you.