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National Bank

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EQ Bank

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Homewise

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Meridian

$50,000+
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5.95%
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7-Year Fixed Rate Mortgage

A 7-Year fixed rate mortgage is a home loan with a fixed interest rate for seven years. This mortgage is a popular choice for many Canadians because it offers predictability and peace of mind. With a 7-Year fixed rate mortgage, you can lock in a low-interest rate for seven years, even if rates go up.

There are a few things to consider before you apply for a 7-Year fixed rate mortgage. First, you must ensure you are comfortable with the idea of a longer-term commitment. Secondly, you need to compare rates from different lenders to ensure you get the best deal. This article contains more tips and information about a 7-Year fixed rate mortgage.

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What is a 7-Year Fixed Rate Mortgage all about?

With a rate that doesn’t change throughout the 7-year term, a 7-year fixed-rate mortgage has a comparatively longer duration. Accordingly, you will be locked into the mortgage rate approved at the beginning of your mortgage term for 7 years.

A 7-Year fixed rate mortgage can be a good or terrible thing. The interest you pay on a fixed-rate mortgage may be more than the interest you would have paid on a variable-rate mortgage if rates dropped throughout the loan’s lifetime. Conversely, rates might increase, or your financial condition could deteriorate, which would typically leave you better off than you could have been with an alternative mortgage.

Alternatively, a shorter term might allow you to requalify at a cheaper rate if your financial situation improves after a few years.

Top 7-Year Fixed Rate Mortgage Partners in CanadaGet a Rate
nestoClick here >>
Smarter LoansClick here >>
WiiBidClick here >>
National BankClick here >>
Coast CapitalClick here >>
EQ BankClick here >>
TangerineClick here >>
HomewiseClick here >>
MeridianClick here >>
MogoClick here >>

How is the rate for a 7-year fixed mortgage determined?

Government bond influence fixed mortgage rates. When purchasing a government bond, the investor agrees to lend the government money for a certain period, such as seven years. The investor receives interest payments throughout the course of those seven years, and the investor gets the total value back after seven years.

Government bonds are a secure investment, so banks and other lenders buy them. Bond returns offset the cost of giving customers mortgage loans, and bond yields and mortgage rates often climb together.

Prevalence of interest in the 7-Year Fixed Rate Mortgage

Regarding fixed mortgages across Canada, the 5-year fixed-rate option stands out as the apparent victor in the long run. However, you shouldn’t make your selection just on how popular something is; instead, you should take into account how much of a risk you’re willing to take as well as how well you can handle increases in your mortgage payment. In situations like these, the assistance of our knowledgeable staff is more important than before.

Those who choose a fixed rate mortgage don’t often go for durations as long as seven years. The decision to get a mortgage with a fixed rate for seven years sometimes corresponds with other personal intentions that it makes perfect sense to coordinate with the length of the mortgage term.

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The advantages of having a mortgage with a fixed rate for 7 years

  • It provides the opportunity to secure a specific rate for an extended period. Mortgage customers sometimes choose terms with a 7-year duration when they want greater rate certainty than a 5-year fixed offer but do not wish to pay the higher interest rate that accompanies a 10-year rate. After the first five years, you may get out of a mortgage with a term of seven years by paying simply the interest for three months.
  • Your monthly mortgage payment will remain constant for the whole term of your mortgage.
  • Even if market rates go up, you will continue to pay a lower rate than the market average.

Potential Drawbacks/Disadvantages of 7-Year Fixed Rate Mortgage

Your ability to make modifications to your mortgage throughout the length of a long term is severely limited

Only a handful of individuals will retain their mortgage for a full seven years. Even those that are highly confident that they’ll be remaining in their house for the long term may pay off their loan earlier, or they can discover that unanticipated life events get in the way of their goals. The longer the period, the bigger the chances you will have to renew your mortgage before the maturity, and this may come with extra charges or penalties.

The fixed interest rates for 7 years are often higher than the fixed interest rates for 5 years, which are more prevalent.

It is unusual for 7-year rates to be provided at reductions of the kind that would make them desirable to most mortgage customers. Those searching for rate consistency over the long term are often best served by selecting the 5-year fixed mortgage (which offers better pricing) or the 10-year mortgage (for those looking for even more long-term rate stability).

Significant prepayment penalties may be incurred if you decide to get out of your mortgage early.

In the event that you have to pay off your mortgage early for whatever reason, you may be given a prepayment penalty if the length of the fixed-rate period is very lengthy. Because mortgages with long-term fixed rates often have more significant penalties compared to those with variable rates, breaking a 7-year fixed rate mortgage might be costly, particularly in the first five years of the loan’s life.

This is due to the fact that fixed interest rates come with a penalty that is referred to as an interest rate differential (IRD). On the other hand, the penalty for violating the majority of variable-rate mortgages is just the interest accrued over the previous three months.

You won’t be able to avoid paying a higher rate even if prime interest rates go down.

A mortgage with a fixed interest rate, as opposed to one with a variable rate, does not have its interest rate determined by the prime rate. Therefore, regardless of whether or not the prime rate goes down, the interest rate that you are required to pay on a mortgage with a fixed rate for seven years will stay the same throughout the mortgage period. This might cost the interest rate to be relatively higher compared to a variable rate.

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How to get the Lowest Possible 7-Year Fixed Mortgage Rate

If you choose a fixed rate mortgage, your monthly payments won’t change throughout the loan’s duration. Even if you choose a mortgage with a lower interest rate and longer term, like a 7-year fixed rate, you must still fulfill the approval conditions for the Bank of Canada’s benchmark 5-year fixed qualifying rate.

 This standard protects the lender from loss and guarantees that you have sufficient income to make your monthly mortgage payments in full and on time.

The following are some factors that affect mortgage rates;

Cash In Advance (Down Payment)

In addition to your mortgage payment monthly, you may be required to pay mortgage default insurance which depends on the amount of your down payment. If your down payment is less than a certain percentage of the property’s value, your lender can compel you to get mortgage default insurance. Being able to drop a substantial amount of down payment makes it easier for lenders to approve your mortgage and allows you to easily spread the rest of the payment across the mortgage term.

Mortgage Type

Your interest rate on the mortgage will be affected by your kind of mortgage, such as whether it is variable or fixed, open or closed. Every pick is made by an individual based on a variety of considerations.

And even though variable mortgages have been shown to be more cost-efficient over time compared to fixed mortgages, some individuals still like the assurance of having the same payment throughout the mortgage, as is the case with fixed mortgages.

Amortization Period

The term “amortization period” refers to the time it would take to pay off a mortgage if the borrower made consistent payments at a specific interest rate. It is based on the assumption that the mortgage will entirely pay off.

If you choose an amortization term that is longer, the amount that you pay each month toward your mortgage will be reduced. Your payments are stretched over a more extended period, resulting in a lower payment overall. This is due to the fact that your payments will spread out over a more extended period.

There is a possibility that mortgages with longer amortization periods will have higher interest rates associated with them. Your total interest costs will increase proportionately with the length of time it takes you to pay off your mortgage.

Credit Score

Credit score is one of the immediate considerations that lenders take into account when determining the interest rates they give on loans, as well as whether or not they would accept the loan altogether. You need a good credit score if you want the bank to provide you with a discount rate, which is often a few percentage points cheaper than the published rate.

There are a variety of actions you may take to bring up the number that represents your creditworthiness. Paying your payments on time should be your priority. Then, if you are still carrying a charge on one or more of your credit cards, you should also make an effort to pay down a substantial portion of the sum each month. Lastly, go through your credit report to ensure that it is free of any inaccuracies or pending collections associated with your identity.

Online mortgage rate comparison

Before signing a mortgage, it would be best if you were certain that you are obtaining the best rate possible and that the conditions are appropriate for your circumstances. The following are Mortgage providers/ Mortgage brokers in Canada that provide good interest rates for 7-year fixed rate mortgages;

Coast Capital

Coast Capital is an online bank that provides various mortgage products ranging from Fixed rate mortgage(mortgage terms is within 1-10 years), Variable rate mortgage(mortgage terms is 1-year and 5-year variable rate). The lowest mortgage rate offered now is 4.700% for a 5-year variable rate.

Meridian

Meridian provides competitively priced flexible mortgages. Being one of Canada’s biggest credit unions, Meridian focuses on giving its members services that make it simpler for them to become homeowners sooner. With a  Meridian fixed-rate mortgage, you may fix your interest rate for the whole life of the loan, and your mortgage payments will remain the same even if Meridian raises its interest rates over the period.

Fixed-rate closed-term mortgages are available from Meridian for periods of 1, 2, 3, 4, 5, 7, and 10 years. They also provide open-term mortgages with fixed rates for one year. Other examples of Mortgage providers/partners are; Nesto, National Bank, Homewise, Tangerine, and so on. It is good to check through the various options you have before you settle for one mortgage rate.

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Offers shown here are from third-party advertisers. We are not an agent, representative, or broker of any advertiser, and we don’t endorse or recommend any particular offer. Information is provided by the advertiser and is shown without any representation or warranty from us as to its accuracy or applicability. Each offer is subject to the advertiser’s review, approval, and terms. We receive compensation from companies whose offers are shown here, and that may impact how and where offers appear (and in what order). We don’t include all products or offers out there, but we hope what you see will give you some great options.

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September 23, 2022
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FAQs about 7-Year Fixed Rate Mortgages

What is a fixed rate mortgage?

Any mortgage with the interest rate locked in throughout the life of the loan is called a fixed-rate mortgage. Your mortgage's interest rate won't alter throughout the loan's duration. Home buyers choose fixed-rate mortgages because they provide for budgeting, stability, and planning. You can more easily plan for the future and stick to a budget when you know exactly how much you'll be paying each month on your mortgage.

When should I consider choosing a 7-year fixed-rate mortgage?

7-year fixed-rate mortgages are for those ready for a long-term financial commitment. You've discovered an interest rate you want to lock down, you don't intend on relocating, and you don't see your life circumstances altering in a manner that might influence your capacity to pay your mortgage. Long-term mortgage rates are higher than short-term rates for stability.

Can I pay off my 7-year fixed-term mortgage early?

That depends on your mortgage type and agreement. With a 7-year fixed rate open mortgage, you may make early payments or pay off your mortgage via refinancing or cash payment, and that's why they're often more pricey. But paying off a 7-year fixed closed mortgage might be challenging. You may face significant penalties, generally three months' worth of interest or the difference between what you're paying and market rates now, whichever is larger. Sometimes, your lender may only approve it if you sell your home.

Are seven-year mortgages preferable to other term mortgages?

The answer to this question depends on your search criteria. Longer mortgage terms, like the 7-year fixed rate, enable borrowers to lock in a favorable interest rate for a considerable time. When interest rates are low but are beginning to climb again, this might be advantageous.

How much should I expect to pay monthly on a 7-year fixed mortgage?

The amount to be paid monthly depends on the interest rate. A higher interest rate is associated with mortgages with longer durations, such as seven or ten years since the lender has to protect their investment against the possibility that either you, the borrower, or interest rates would increase over that time. When determining your interest rate, a lender will consider several factors, including your credit score, length of work, income, debt load, and down payment.

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