December 2025 is here, and if you're thinking about refinancing your mortgage, now's the time to look at the rates. It can feel like a maze trying to figure out the best deals, especially with all the different options out there. We're going to break down what you need to know about mortgage refinance rates so you can hopefully save some money. It’s not just about finding the lowest number; it’s about finding the right fit for your situation. Let's see what's available.

Key Takeaways

• When looking for mortgage refinance rates, the lowest advertised rate isn't always the best choice. Consider the overall features and how they fit your long-term financial goals.
• Refinancing can happen for various reasons, like changing loan terms, adding a HELOC, or switching lenders. Each reason can affect the rates and terms you're offered.
• Mortgage rates are influenced by many factors, including the mortgage type (fixed vs. variable), loan-to-value ratio, property use, and whether the mortgage is insured.
• A mortgage rate hold lets you lock in a specific rate for a set period, which can be helpful if you expect rates to rise before your refinance is complete.
• Understanding mortgage prepayment options and features like portability can help you save money and pay off your mortgage faster, even when refinancing.

Today’s Mortgage Interest Rate in Canada

As of December 11, 2025, the mortgage landscape in Canada shows a few key trends for those looking to refinance or secure new rates. The most popular choices, the 5-year fixed and 5-year variable rates, are sitting at averages of 4.69% and 4.27% respectively. These terms are often favored because they offer a decent mix of predictability and flexibility.

It's important to remember that these are averages, and actual rates can vary quite a bit. Factors like whether your mortgage is insured (meaning a down payment of less than 20%) or conventional (20% or more down) play a role. Insured mortgages often come with slightly lower rates, but conventional mortgages give you more freedom and skip the default insurance cost.

Here's a quick look at some average conventional mortgage rates you might see across Canada:

• 2-year fixed: 4.92%
• 3-year fixed: 4.67%
• 5-year fixed: 4.69%
• 5-year variable: 4.27%

Keep in mind that advertised rates are just a starting point. The rate you're actually offered can change based on your specific financial situation, the lender, and market conditions right up until you sign the commitment papers. Always ask for a personalized quote.

When you're comparing rates, don't just look at the number. Check out the fine print. Some low rates come with restrictions on how much you can pay down each year or hefty penalties if you need to break the mortgage early, perhaps to sell your home. It’s a good idea to compare apples to apples – fixed to fixed, variable to variable, and for the same term length.

Understanding Today’s Best Mortgage Rates in Canada

So, you're looking to refinance your mortgage in December 2025 and want to make sure you're getting a good deal. That's smart! The interest rate you get can make a big difference over the life of your loan. It's not just about picking the first rate you see, though. There are a few things to keep in mind when you're comparing what's out there.

First off, remember that rates can change pretty quickly. What looks good today might be different tomorrow. It's a good idea to get a rate hold if you find something you like, just to lock it in for a bit while you sort out the details. The best rate for you really depends on your specific situation, like how much you owe, your credit history, and what kind of mortgage you're looking for.

Here's a quick look at some common rates as of mid-December 2025. Keep in mind these are averages and can vary by lender and your personal circumstances:

• 5-Year Fixed: Around 4.69% (average conventional)
• 5-Year Variable: Around 4.27% (average conventional, often tied to the prime rate)

When you're comparing, make sure you're looking at apples to apples. A 5-year fixed rate should be compared to another 5-year fixed rate, not a variable one. Also, check out the fine print. Some super low rates might come with restrictions, like penalties for paying off your mortgage early or limits on how much extra you can pay each year. It’s worth asking about these details.

Don't just focus on the lowest advertised rate. Sometimes a slightly higher rate from a lender with more flexible terms or better customer service can be a better fit for your long-term financial goals. It’s a balance between cost and convenience.

Think about what matters most to you:

• Predictability: A fixed rate means your payment stays the same for the entire term, which is great for budgeting.
• Potential Savings: Variable rates can sometimes be lower, especially if interest rates drop, but they can also go up.
• Flexibility: Some mortgages allow for more frequent prepayments without penalty, which can help you pay down your principal faster.

Ultimately, shopping around and talking to a few different lenders or a mortgage broker is the best way to find the rate that truly works for your refinance plans.

Find the Best Mortgage Rates in Canada

Looking for the best mortgage rates in Canada right now can feel like a treasure hunt. It's not just about picking the first number you see; there's a bit more to it. You've got to compare apples to apples, meaning a 5-year fixed rate should be compared to another 5-year fixed rate, not a variable one. Same goes for variable rates – match them up with other variable rates.

Beyond just the percentage, pay attention to what comes with the rate. Some super low rates might have strings attached, like penalties for paying off your mortgage early or restrictions on selling your home. It’s like getting a great deal on a car, only to find out you can’t drive it on Sundays. Always read the fine print.

Here’s a quick look at some common rate types you’ll see:

• 5-Year Fixed: Your interest rate stays the same for five years. This offers predictability, which is nice if you like knowing exactly what your payment will be.
• 5-Year Variable: This rate usually starts lower than a fixed rate and is tied to the lender's prime rate. It can go up or down, so your payments might change over the five years.

When you're comparing, remember that rates can change daily, sometimes even more often. What looks good today might be different tomorrow. It’s a good idea to get a rate hold if you find something you like, so you have a set rate for a certain period while you finalize your mortgage.

Don't forget that the rate you're offered can depend on a few things. Your credit score plays a big part, as does how much you're putting down as a down payment (your loan-to-value ratio). Lenders also look at your income and how much debt you already have. So, while comparing rates is key, your personal financial picture matters a lot too.

Mortgage Rate Options

When you're looking to refinance or get a new mortgage, you'll run into a bunch of different rate options. It's not just about picking the lowest number you see; there's more to it than that. The type of mortgage you choose plays a big part in what rate you'll actually get.

Think about it like this: some mortgages are more flexible, letting you pay them off early without a huge penalty. These usually come with a slightly higher rate because the lender is taking on a bit more risk. On the flip side, mortgages with fewer perks, like strict prepayment rules, might offer a lower rate. It's a trade-off, really.

Here are some common ways mortgage rates are presented:

• Fixed-Rate Mortgages: The interest rate stays the same for the entire term of your mortgage. This means your principal and interest payments won't change, making budgeting easier.
• Variable-Rate Mortgages (VRMs): The interest rate can go up or down based on the lender's prime rate. Your payments might change, which can be a bit unpredictable, but sometimes they start lower than fixed rates.
• Open Mortgages: These offer the most flexibility. You can pay off the entire mortgage or make large extra payments at any time without penalty. Because of this freedom, they typically have higher interest rates.
• Closed Mortgages: These are more common and usually have lower interest rates than open mortgages. However, they come with restrictions on how much extra you can pay towards the principal each year, and breaking the mortgage before the term ends can result in significant penalties.

Choosing the right mortgage option is about balancing flexibility, predictability, and cost. What seems like the lowest rate might not be the best deal if it comes with too many restrictions for your financial situation.

It's also worth noting that things like your down payment size and whether the mortgage is insured can affect the rates offered. A bigger down payment generally means a lower loan-to-value ratio, which can lead to better rates because it's less risky for the lender.

5-Year Fixed

When you're looking at mortgage options in Canada, the 5-year fixed rate is a really popular choice. It's kind of the go-to for a lot of people because it offers a predictable payment for a good chunk of time. This means your principal and interest payment stays the same for the entire five years, no surprises there.

Think of it like this: the rate you get when you sign the papers is the rate you'll have until renewal. This stability is a big deal, especially if you're worried about interest rates going up. It helps with budgeting because you know exactly what that part of your housing cost will be.

Here's a quick look at how it generally works:

• Rate Lock: You secure a specific interest rate for five years.
• Predictable Payments: Your monthly principal and interest payment doesn't change during that term.
• Renewal: After five years, you'll need to renew your mortgage, and the rate will be based on the market at that time.

This type of mortgage is tied to the performance of 5-year Government of Canada bond yields. Lenders add a bit on top of that yield to cover their costs and risks. So, while your rate is fixed for five years, the underlying bond yields can fluctuate, influencing what rates are available for new mortgages.

Choosing a 5-year fixed rate means you're trading potential savings from falling rates for the security of knowing your payment won't increase. It's a trade-off many Canadians find comforting.

It's worth noting that while the 5-year fixed is common, it's not always the cheapest option. Sometimes, variable rates might offer lower payments initially. However, for many, the peace of mind that comes with a fixed payment for half a decade is well worth it.

5-Year Variable

A 5-year variable rate mortgage means your interest rate can go up or down over the five-year term. It's tied to a benchmark rate, usually the lender's prime rate. This means your monthly payment could change, though some variable mortgages keep the payment the same and adjust the amortization period instead. It's a bit of a gamble, but sometimes it pays off.

The main draw here is the potential for lower initial rates compared to a fixed mortgage. If interest rates fall during your term, you could end up paying less interest overall. However, if rates climb, your payments will increase, which can make budgeting tricky.

Here's a quick look at how it generally works:

• Rate Fluctuations: Your rate is linked to an index, like the prime rate. When that index moves, your rate moves too.
• Payment Adjustments: Depending on the mortgage type, either your monthly payment amount changes, or the portion of your payment going towards principal and interest shifts, affecting how quickly you pay down the loan.
• Risk vs. Reward: You accept some uncertainty for the chance to benefit from falling rates.

It's not for everyone, especially if you like knowing exactly what your mortgage payment will be each month. But if you're comfortable with a bit of unpredictity and think rates might drop, it could be a smart move.

Choosing a variable rate means you're betting on interest rates staying stable or decreasing over your term. It's a strategy that can save you money if your prediction is right, but it comes with the risk of higher costs if rates unexpectedly rise.

Posted & Prime Rate History

Looking back at mortgage rates in Canada can give you a sense of where things have been and where they might be headed. The posted rate, often seen as a benchmark, and the prime rate, which influences variable mortgage rates, have seen their ups and downs over the years. Understanding this history helps put current rates into perspective.

The Bank of Canada's policy rate directly impacts the prime rate, which then influences variable mortgage rates. When the Bank of Canada adjusts its overnight rate, prime rates typically follow suit almost immediately. Posted rates, on the other hand, are set by individual lenders and can be more influenced by market conditions and competition.

Here's a general look at how these rates have behaved historically:

• Periods of Low Rates: In certain years, like during the early 2020s, both posted and prime rates hit historic lows. This made it an attractive time for many to refinance or purchase homes.
• Rising Rate Environments: Conversely, there have been times when rates have climbed significantly. This often happens when inflation is a concern, and the Bank of Canada raises its policy rate to cool down the economy.
• Fluctuations: Rates aren't static. They can change based on economic performance, government policy, and global financial events. For instance, a strong economy might lead to higher rates, while a slowdown could prompt rate decreases.

Keeping an eye on the Bank of Canada's announcements and the general economic climate is key to understanding potential shifts in mortgage rates. While past performance isn't a crystal ball, it does provide a valuable backdrop for making informed decisions about your mortgage.

For example, in December 2025, the Bank of Canada maintained its overnight policy rate at 2.25%, leaving the prime rate at 4.45%. This stability, following a period of economic growth, suggests a cautious approach to monetary policy. However, market expectations sometimes point towards future adjustments, so staying informed is always a good idea.

Mortgage Type

When you're looking into refinancing your mortgage, the type of mortgage you choose plays a pretty big role in what kind of rate you'll get. It's not just about picking the lowest number you see; it's about understanding how different mortgage structures work and which one fits your financial situation best right now.

Think about it like this: different types of mortgages have different levels of risk for the lender, and that risk is usually reflected in the interest rate. Some mortgages offer more flexibility, like being able to pay them off early without a penalty, but that flexibility often comes with a slightly higher rate. Others might have stricter rules but offer a lower rate in return.

Here are a few common distinctions to keep in mind:

• Open vs. Closed Mortgages: An open mortgage lets you pay off your entire loan or make large extra payments anytime, penalty-free. This is super convenient if you think you might come into extra cash, but lenders charge more for this freedom. A closed mortgage usually has a lower rate but comes with limits on how much extra you can pay and penalties for paying it off early.
• Fixed vs. Variable Rates: With a fixed-rate mortgage, your interest rate stays the same for the entire term, meaning your principal and interest payments won't change. This predictability is great for budgeting. A variable-rate mortgage, on the other hand, has a rate that can go up or down based on market conditions. Your payment might stay the same, but the amount going towards interest versus principal could shift, or your payment itself might adjust.
• Insured vs. Uninsured: This often comes down to your down payment size and the mortgage amount. Insured mortgages (typically with less than a 20% down payment) are less risky for lenders because they're backed by mortgage default insurance. This usually means you'll get a better rate compared to an uninsured mortgage, where the lender takes on more risk.

The mortgage type you select is a significant factor influencing your interest rate. It's a personal choice tied to your financial planning needs and how much flexibility or predictability you require from your loan.

So, while a super low rate might catch your eye, make sure you're comparing apples to apples. A slightly higher rate on a mortgage that offers the flexibility you need might actually save you more in the long run, depending on your goals.

Open Mortgages vs. Closed Mortgages

When you're looking at mortgage options, you'll run into two main categories: open and closed mortgages. They sound pretty similar, but they have some big differences, especially when it comes to flexibility and cost.

Open mortgages offer the most flexibility, allowing you to pay off your entire mortgage balance at any time without facing any penalties. This can be really appealing if you think you might come into a lump sum of cash, like from a bonus or an inheritance, and want to pay down your mortgage faster. Think of it like having a flexible payment plan for your home loan.

However, this freedom comes at a price. Because lenders know you can pay them back early without penalty, they charge a higher interest rate on open mortgages. It's their way of making sure they still make a certain amount of money, even if the loan term is cut short.

Closed mortgages, on the other hand, are more restrictive. They usually come with a set term, and if you want to pay off more than a certain amount (often a small percentage of the principal each year) or pay off the entire mortgage before the term is up, you'll likely have to pay a prepayment penalty. These penalties can sometimes be quite substantial, so it's important to understand the terms before you sign.

Here's a quick rundown:

• Open Mortgages:
  • High flexibility to pay off early.
  • No prepayment penalties.
  • Typically come with higher interest rates.
  • Good if you anticipate large, unexpected payments.
• Closed Mortgages:
  • Limited options for early repayment without penalty.
  • Prepayment penalties usually apply if you exceed allowed limits.
  • Generally offer lower interest rates compared to open mortgages.
  • Suitable if you prefer predictable payments and don't plan on early payoff.

Choosing between an open and closed mortgage really boils down to your financial habits and future expectations. If you value the ability to pay down your mortgage quickly without worry, and you're okay with a slightly higher rate, an open mortgage might work. But if you're looking for the lowest possible interest rate and don't plan on making large extra payments, a closed mortgage is usually the way to go.

Variable Rate Mortgages vs. Adjustable Rate Mortgages

Okay, so you've probably heard the terms 'variable rate mortgage' and 'adjustable rate mortgage' thrown around, and maybe you're wondering if they're the same thing. They're pretty similar, but there's a key difference that can actually impact your monthly budget.

Think of it this way: both types of mortgages have interest rates that can go up or down based on what's happening with benchmark rates, like the lender's prime rate. The big distinction comes down to how your actual payment changes.

• Variable Rate Mortgage (VRM): With a VRM, your interest rate might change, but your actual mortgage payment stays the same for the duration of your term. How does that work? When rates go down, more of your fixed payment goes towards the principal. When rates go up, more of your payment goes towards interest, and less towards the principal. The lender absorbs the rate fluctuation by adjusting the principal/interest split within your payment.
• Adjustable Rate Mortgage (ARM): An ARM is a bit more direct. When the benchmark interest rate changes, your mortgage payment actually changes too. If rates go up, your payment goes up. If rates go down, your payment goes down.

The main takeaway is that VRMs offer more payment stability, while ARMs directly reflect rate changes in your monthly bill.

Here's a quick rundown:

• VRM: Rate changes, payment stays the same. Lender adjusts principal/interest split.
• ARM: Rate changes, payment changes. You directly feel the rate shifts.

Choosing between them really depends on your comfort level with risk and how you budget. If you prefer a predictable monthly expense, a VRM might feel safer. If you're okay with your payment fluctuating and want to directly benefit when rates drop, an ARM could be an option. It's always a good idea to chat with a mortgage pro to figure out which fits your financial picture best.

Mortgage Portability

Thinking about moving but don't want to get hit with a big penalty on your current mortgage? Mortgage portability might be your best friend. Basically, it's a feature that lets you transfer your existing mortgage from your current home to a new one when you sell. This can save you a ton of cash if breaking your mortgage would cost you a lot, or if you've got a rate that's way better than what's available today.

Here's how it generally works:

• You sell your current home.
• You buy a new home.
• Your lender gives you a window (often 30 to 90 days) from when your old place sells to get the new mortgage set up. This is the key part – you're essentially moving your mortgage, not closing it out.
• If your new mortgage is for a larger amount than your old one, the lender will usually blend your old rate with the current market rate for the difference. They'll calculate a weighted average, so you're not starting completely fresh with today's higher rates.

It's not a feature every mortgage has, so it's worth checking the fine print. Some lenders might charge a bit more for this flexibility, or it might only be available on certain mortgage products. But if you think you might move within your mortgage term, looking into portability upfront could save you a headache and a lot of money down the line.

Portability is all about keeping your current mortgage terms and rate when you move. It's like picking up your mortgage and taking it with you to your next house, avoiding the usual penalties for ending your mortgage early.

Mortgage Prepayment Options

Paying down your mortgage faster than your regular schedule can really save you a lot of money on interest over the life of the loan. Most lenders let you do this in a few different ways, and understanding these options can help you become mortgage-free sooner.

Here are the common ways you can make extra payments:

• Lump-Sum Payments: This is when you pay an extra amount all at once. Many mortgages allow you to make a lump-sum payment once a year, often up to 10% or 20% of your original mortgage balance. Some lenders are more flexible and let you make multiple smaller lump-sum payments throughout the year, as long as you don't go over your annual limit.
• Double-Up Payments: This feature lets you double your regular mortgage payment. If you're already on an accelerated payment schedule (like bi-weekly instead of monthly), doubling that payment can lead to significant savings.
• Increase Regular Payments: Some mortgages let you increase your regular payment amount by a certain percentage each year. This is similar to a lump-sum payment but is spread out over your scheduled payments for that year.
• Accelerated Payments: While not strictly a prepayment privilege, choosing to pay weekly or bi-weekly instead of monthly can significantly speed up your mortgage payoff. You end up making the equivalent of one extra monthly payment each year without even noticing it.

It's important to check the specific rules with your lender. Some mortgages come with more features than others, and sometimes the lowest advertised rates might have fewer prepayment options. Always ask about the details before you sign.

Taking advantage of even small extra payments can make a big difference in how much interest you pay and how quickly you own your home outright.

Mortgage Refinances and Uninsured Purchases & Renewals

When you're looking at refinancing your mortgage, or even buying a new place or renewing your current mortgage, and it falls into the 'uninsured' category, things can get a bit different. Basically, an uninsured mortgage means the lender is taking on more risk. This usually happens if the property value is over $1.5 million, or if you're extending your amortization period beyond 25 years. Refinances, in general, are also considered uninsured transactions because you might be pulling out equity or changing the terms, which adds layers of risk for the lender.

Lenders price these higher-risk situations differently, often with higher interest rates compared to insured mortgages. Because the lender is shouldering more of the potential downside, they adjust their pricing accordingly. They have their own internal rules for assessing risk on these types of loans, and they'll use ratios and rates that make them comfortable with the level of risk they're taking on. This is different from insured mortgages, which have more standardized rules set by insurers.

Here's a quick look at what makes a mortgage uninsured:

• High Property Value: If the purchase price or appraised value of the property is over $1.5 million.
• Extended Amortization: If the mortgage's amortization period goes beyond 25 years.
• Refinance Transactions: This includes taking cash out, extending the mortgage term, or making significant changes to the loan structure.

For uninsured transactions, lenders have more flexibility in setting their own risk assessment criteria. They can adjust lending ratios and mortgage rate pricing based on the specific risk profile of the file and their own comfort level with that risk. The funding for these mortgages often comes from the lender's own capital rather than the mortgage bond market, which has stricter qualification rules.

When you're renewing an uninsured mortgage, the qualifying rate might be your contract rate, but this often depends on whether there are any changes to the amortization or balance. For purchases and refinances, you'll typically need to qualify using a rate that's the greater of the benchmark rate or your contract rate plus 2%. It's a good idea to compare rates from different lenders, as their risk appetites can vary, potentially leading to different pricing. You can check out current mortgage rates in Canada to get a sense of what's available.

Should I Choose the Lender with the Lowest Rate?

It's tempting, right? Seeing that super low interest rate advertised and thinking, 'That's the one!' But hold on a second. The lowest rate isn't always the best deal for your specific situation. Sometimes, those rock-bottom rates come with strings attached, like fewer options for paying down your mortgage early or hefty penalties if you need to break the loan. It's like getting a "free" appetizer that makes you buy the most expensive entree.

Think about what you might be giving up. Some of the cheapest mortgages might not let you make extra payments without a big fee. Others might not allow you to 'port' your mortgage – that's moving your existing rate to a new home if you sell. If you can't port it and decide to pay it off early, the penalty could be way more than just a few months' interest. It could be a percentage of what you still owe.

Here are a few things to consider beyond just the rate:

• Prepayment Privileges: Can you make extra payments towards your principal? This is a big one for saving money over time. Some lenders let you pay up to 10-20% extra each year without penalty, while others are much stricter.
• Portability: If you sell your home and buy another, can you take your current mortgage rate with you? This can save you a lot if rates have gone up.
• Flexibility: Does the mortgage offer options for making lump-sum payments or increasing your regular payments? More flexibility usually means you can pay off your mortgage faster.

Sometimes, a slightly higher rate from a lender that offers more flexibility, like robust prepayment options or portability, can actually save you more money in the long run. It's about finding the right balance between cost and features that fit your life.

So, before you jump at the lowest advertised rate, take a moment to look at the whole package. What features are included? What are the penalties? Does it align with your plans for your home and your finances over the next few years? Talking to a mortgage professional can really help you sort through the fine print and find a mortgage that truly works for you, not just one that looks good on paper.

Mortgage Down Payment

So, you're thinking about refinancing and wondering how your down payment plays into all of this. It's a pretty big deal, honestly. The size of your down payment directly impacts your loan-to-value (LTV) ratio, which is basically a lender's way of looking at how much you owe compared to what your home is worth. This LTV is super important because it tells the lender how much risk they're taking on.

Here's a quick breakdown of how it generally works:

• Less than 20% Down: If your down payment is less than 20% of the home's value, your mortgage is considered "insured." This means you'll have to get mortgage default insurance. Lenders like this because it protects them if you can't make your payments. Because of this insurance, you might actually get a better rate than if you had a larger down payment but no insurance.
• 20% or More Down: When you put down 20% or more, your mortgage is "insurable" or "uninsured." For homes under $1 million with an amortization of 25 years or less, putting down 20% or more means your mortgage is "insurable." The more equity you have (meaning the more you've paid off or put down), the lower the lender's risk, and generally, the better the rate you can snag. Lenders might even buy insurance on the back end, which doesn't cost them much when you have significant equity.
• Over $1.5 Million or Longer Amortization: If your property is valued over $1.5 million, or you're looking at an amortization period longer than 25 years, your mortgage will be "uninsured." In these cases, lenders look at your specific situation and decide on the rate based on their own risk assessment.

It's not just about the percentage you put down; it's about how that affects the lender's risk. More equity usually means less risk for them, which can translate into a better deal for you. But remember, the absolute lowest rate isn't always the best fit if it comes with a bunch of restrictions you don't want.

Think of it this way: the lender wants to be sure they'll get their money back. A bigger down payment makes that more likely, but the default insurance for smaller down payments also gives them that security. It's a balancing act, and your down payment is a key piece of that puzzle.

Insured Mortgages vs Insurable Mortgages

When you're looking into mortgage rates, you'll hear terms like 'insured' and 'insurable.' They sound pretty similar, but they actually mean different things for your mortgage and, importantly, your interest rate.

Basically, an insured mortgage is one where you've put down less than 20% for your down payment. Because there's a higher risk for the lender if you can't make payments, you're required to get mortgage default insurance. This insurance protects the lender, and because their risk is lower, you often get a better rate. Think of it as a safety net for the bank.

An insurable mortgage is a bit different. This usually applies when your down payment is 20% or more, but the property value is below a certain threshold (like $1 million). In this case, the mortgage could be insured, and lenders often price it with a rate that reflects this lower risk, even if you don't end up getting the insurance yourself. The key here is that the mortgage meets the criteria for insurance, which signals less risk to the lender.

Here's a quick breakdown:

• Insured Mortgage: Down payment is less than 20%. Requires default insurance. Generally leads to the lowest rates.
• Insurable Mortgage: Down payment is 20% or more, and the property value is below a certain limit. The mortgage could be insured, leading to competitive rates.
• Uninsured Mortgage: This covers situations like refinances, properties over $1.5 million, or amortization periods longer than 25 years. Since there's no default insurance, the lender takes on all the risk, and rates are typically higher. You can find more details on uninsured mortgage rates if this applies to your situation.

The main takeaway is that the presence or possibility of default insurance significantly impacts the lender's risk. Lower risk for the lender usually translates to a better interest rate for you, the borrower. It's always worth understanding which category your mortgage falls into, as it can make a real difference in your monthly payments and the total interest paid over the life of the loan.

Property Use

The way you plan to use the property you're mortgaging really matters to lenders. It's not just about the house itself, but how it fits into your life and financial picture.

Your primary residence, the place you actually live, is generally seen as the lowest risk by lenders. They figure you'll prioritize paying that mortgage, even if things get a bit tight. This often means you'll get access to the best rates.

Things change a bit when you're looking at other uses:

• Investment Properties: If you're buying a place to rent out, expect a slightly higher interest rate. The thinking here is that if you had to choose between paying your own mortgage or the one on a rental property during tough times, your own home would come first. Lenders add a bit of a risk premium to account for this.
• Owner-Occupied Rental Suites: Now, this is interesting. If you buy a home that you live in, but it also has a separate, legal rental suite (like a basement apartment), lenders often treat this similarly to a primary residence. You might get those lower, owner-occupied rates because you're still living there and it's not purely an investment.

The distinction between how a property is used directly impacts the lender's perception of risk. A primary residence is the most secure in their eyes, while a purely investment property introduces variables that necessitate a higher rate to compensate for potential default scenarios.

So, before you even start looking, think about what you'll be doing with the property. It can make a real difference in the rates you're offered when you refinance.

Transaction Type

When you're looking at mortgage rates, the type of transaction you're doing really matters. It's not just about buying a new place; other things can fall under this umbrella too, and they might get different rates.

Think about it: a simple purchase is one thing, but what if you're trying to pull out some equity from your home, or maybe combine a mortgage with a home equity line of credit (HELOC) that's with a different lender? Those situations are often considered refinances, and they can have their own set of rules and rates.

Here are a few common transaction types that can affect your mortgage:

• Purchase: This is the most straightforward – buying a new property.
• Refinance: This covers a bunch of scenarios, like extending your amortization period, changing mortgage terms, adding a HELOC, or even moving your mortgage from a private lender to a major bank.
• Renewal: When your current mortgage term is ending, you're renewing it, usually with the same lender.
• Switch: This is similar to a refinance but typically means moving your mortgage to a new lender without changing the terms or taking out extra cash.

The lender looks at the risk involved with each transaction type, and that's a big part of how they decide on the rate they offer you. For instance, taking cash out or extending your loan might be seen as a bit riskier than a simple purchase, so the rates could reflect that.

Understanding the specific transaction you're involved in is key. It helps you know what to expect when shopping for rates and what factors lenders will be considering. Don't be afraid to ask your lender or broker to clarify how your specific situation is classified.

Mortgage Rate Hold

So, you're thinking about refinancing or maybe even buying a new place. One thing you'll hear about is a 'mortgage rate hold.' What is it, really? Basically, it's when a lender agrees to lock in a specific interest rate for you for a certain amount of time. This gives you a bit of breathing room, especially if you're in the middle of house hunting or sorting out your refinance paperwork.

Lenders usually offer these holds for anywhere from 60 to 180 days. It's like putting a temporary reservation on a rate that you've qualified for. This can be super helpful because mortgage rates can swing around quite a bit, and having a rate locked in means you're protected if they go up while you're finalizing things.

Here's a quick rundown of what to keep in mind:

• Duration: How long will the lender hold the rate? Make sure it's long enough for your needs.
• Rate Premium: Sometimes, lenders add a small extra charge or a slightly higher rate for offering this security. It's worth asking if there's a difference between a rate hold rate and a live rate.
• Pre-approval vs. Live Rate: A rate hold is often part of a pre-approval, which happens before you have a specific property. Once you have an accepted offer, you'll usually lock in a 'live' rate for that particular transaction.

It's important to remember that a rate hold isn't a guarantee of approval. You still need to meet all the lender's final conditions. But it does give you a solid idea of what your interest rate will be, which makes budgeting and planning much easier.

Some lenders might offer a slightly better rate if you don't need a long hold period, especially for quick closings. It's all about finding that balance between security and the best possible rate for your situation. Getting a rate hold can provide a lot of peace of mind during what can be a stressful process.

Convertibility

Convertibility is a feature that lets you switch your variable-rate mortgage into a fixed-rate one without breaking your current term. Think of it as a built-in option to change your mind about your interest rate type. Most variable mortgages come with this feature, but it's always a good idea to check the specifics with your lender.

When you convert, you're essentially changing the nature of your mortgage. You might be able to convert for the remainder of your current term, or some lenders might let you extend it to a full five-year term. It's not usually a free pass, though. Lenders typically won't offer you the same new-client discounts they might give someone taking out a brand-new fixed-rate mortgage. You'll likely be looking at their standard rates for conversions.

Here's a quick look at what to consider:

• Timing is Key: Decide when it makes sense for you to convert. Is it when rates are climbing, or when you just want the predictability of a fixed payment?
• Cost Analysis: Always do the math. Compare the cost of converting (including any potential fees or rate differences) against the potential savings or risks of staying variable.
• Lender Policies: Each lender has its own rules about convertibility. Some might have more options than others.

Converting your mortgage is a significant decision. It's wise to carefully weigh the pros and cons, especially considering how interest rates have been moving. For instance, the Bank of Canada has made several rate adjustments, which can influence these decisions check rate history.

Ultimately, convertibility offers flexibility. It's a way to manage risk and adapt your mortgage strategy as market conditions or your personal financial situation changes.

Mortgage Insights To Save You Money

Thinking about refinancing your mortgage in December 2025? It's a smart move to look beyond just the advertised interest rate. Lenders often bundle different features and restrictions with their rates, and what looks like the lowest number might not actually be the best deal for your specific situation.

Understanding the fine print can save you a lot of money in the long run.

Here are a few things to keep in mind:

• Prepayment Privileges: These let you pay down your principal faster than your regular payments. Think lump sums (like 10-20% of the balance annually) or even just rounding up your monthly payments. Using these can shave years and thousands of dollars off your mortgage.
• Portability: If you think you might move before your term is up, a portable mortgage lets you transfer your existing mortgage to a new property without a penalty. This can be a lifesaver if you have a great rate locked in.
• Convertibility: Especially relevant if you're considering a variable-rate mortgage, convertibility allows you to switch to a fixed rate later if market conditions change or your comfort level shifts. It's like having an insurance policy against rising rates.

Don't just chase the lowest rate. Consider what features are important to you and how they align with your financial goals. Sometimes, a slightly higher rate with more flexibility is a much better choice.

When you're comparing mortgage offers, it's easy to get fixated on the interest rate. But remember, that rate often comes with a package of other conditions. A mortgage with a slightly higher rate but fewer penalties and more flexible payment options might actually be more cost-effective for you over the life of the loan, especially if your financial circumstances change.

Most Common Mortgage Term Length in Canada

When you're looking at mortgages in Canada, you'll hear a lot about 'terms'. This is basically the period of time your mortgage contract is valid for, and it's usually shorter than the total time it'll take to pay off your loan. Think of it like a lease on an apartment – it's for a set number of years, and then you renew it.

The five-year fixed term is hands down the most popular choice for Canadians. It's become the go-to for many people, even if it's not always the cheapest option out there. Why? It offers a nice blend of predictability and a decent chunk of time before you have to think about renewing.

Here's a quick look at how different terms stack up:

• Short Terms (1-3 years): These can be good if you think interest rates might drop soon. You can renew at a potentially lower rate sooner. But, if rates go up, you could be in for a surprise when it's time to renew.
• Medium Terms (5 years): This is the sweet spot for many. It provides stability for a good while without locking you in for too long. It's the most common for a reason.
• Long Terms (7-10 years): If you really want to lock in a rate for a long time and aren't expecting rates to fall, these might appeal. However, they often come with higher rates and bigger penalties if you need to break the mortgage early.

Choosing the right term really depends on what you think will happen with interest rates and your own financial plans. It's a big decision, and it's worth talking through with a mortgage professional to see what fits your situation best. Remember, just because it's common doesn't mean it's the perfect fit for everyone, so weigh your options carefully before you commit to a mortgage term length.

Deciding on a mortgage term isn't just about picking a number; it's about aligning with your financial future. Consider your life goals, potential job changes, or family growth. A shorter term might offer flexibility, while a longer one provides peace of mind against rate hikes. It's a balancing act, and understanding your own needs is key.

Is a Variable Rate Better Than a Fixed Rate?

This is a question a lot of people wrestle with when they're looking at mortgages, and honestly, there's no single right answer. It really boils down to what you're comfortable with and what your financial situation looks like.

With a fixed-rate mortgage, your interest rate stays the same for the entire term. This means your principal and interest payment never changes, which makes budgeting super straightforward. You know exactly what that part of your bill will be every month. It's like having a predictable routine – comforting for many.

Variable-rate mortgages, on the other hand, have rates that can go up or down. They're usually tied to a benchmark rate, like the prime rate. If that benchmark rate drops, your interest rate might drop too, potentially lowering your payment. But, if it goes up, your payment could increase. Some variable-rate mortgages have payments that stay the same, but the amount going towards principal versus interest changes. Others, called adjustable-rate mortgages (ARMs), actually have payments that change when the benchmark rate moves.

Here's a quick rundown of what to consider:

• Predictability: Fixed rates offer the most predictability. If you like knowing exactly what your mortgage payment will be, this is the way to go.
• Potential Savings: Variable rates can save you money, especially if interest rates fall. Historically, they've sometimes been cheaper over the long run, but that's not a guarantee.
• Risk Tolerance: How much risk are you willing to take? If the thought of your payment increasing makes you anxious, a fixed rate might be better for you. If you're okay with some fluctuation for the chance of lower payments, a variable rate could work.
• Market Conditions: What are experts saying about where interest rates are headed? If rates are expected to drop, a variable rate might look more appealing. If they're expected to rise, locking in a fixed rate could be smart.

Ultimately, the choice between a variable and fixed rate depends on your personal financial goals, your comfort level with risk, and your outlook on future interest rate movements. It's always a good idea to chat with a mortgage professional to go over your specific situation before making a decision.

For example, if you're buying your first home and trying to get a handle on all the new bills, a fixed rate can provide a sense of stability. Knowing your biggest monthly expense is set can make it easier to plan your budget and start building an emergency fund. On the flip side, if you're buying an investment property, a variable rate might offer tax advantages because you can often write off more interest against rental income when rates are higher.

Mortgage Payment Calculator

Figuring out what your monthly mortgage payment will look like is a pretty big deal when you're thinking about buying a place or refinancing. It's not just about the interest rate, though that's a huge part of it. You've also got to factor in the loan amount, how long you plan to pay it off (that's your amortization period), and sometimes even property taxes and insurance if they're bundled in.

Using a mortgage payment calculator can give you a clear picture of your potential monthly expenses. It helps you see how different scenarios play out, so you can budget more realistically.

Here’s a general idea of what goes into that calculation:

• Principal and Interest (P&I): This is the core of your payment, covering the actual loan amount and the interest charged by the lender.
• Property Taxes: Lenders often collect this monthly and hold it in an escrow account to pay your tax bill when it's due.
• Homeowner's Insurance: Similar to taxes, this is usually collected monthly and paid out annually or semi-annually.
• Mortgage Default Insurance (if applicable): If your down payment was less than 20%, you'll likely have this added to your payment.

Let's say you're looking at a $300,000 loan over 25 years with a 5% interest rate. A calculator would help you see that your P&I payment alone might be around $1,770. Add in estimated taxes and insurance, and your total monthly housing cost could jump significantly. It’s this total figure that really matters for your budget.

It's easy to get caught up in just the advertised interest rate, but remember that the total monthly payment is what impacts your day-to-day finances. Always look at the full picture, including all the components that make up your mortgage payment, to avoid any surprises down the road.

Mortgage Refinance Calculator

Thinking about refinancing your mortgage? It's a big decision, and figuring out if it makes financial sense can feel like a puzzle. That's where a mortgage refinance calculator comes in handy. It's a tool designed to help you crunch the numbers and see the potential impact on your monthly payments and overall loan cost.

Using a refinance calculator can show you if the savings from a lower interest rate or a different loan term outweigh the costs associated with refinancing. These costs can include things like appraisal fees, legal fees, and lender charges. The calculator helps you get a clearer picture of the break-even point – how long it will take for your savings to cover these initial expenses.

Here’s a general idea of what a refinance calculator might help you compare:

• Current Mortgage Details: Your existing loan balance, interest rate, and remaining amortization period.
• New Mortgage Options: Potential new loan balances, interest rates, and amortization periods you're considering.
• Refinance Costs: An estimate of all the fees involved in the refinance process.
• Projected Savings: The difference in monthly payments and total interest paid over the life of the loan.

When you input your current mortgage information and the details of a potential new loan, the calculator will typically show you:

• Your new estimated monthly payment.
• The total interest you'll pay over the new loan's term.
• The total cost of the refinance, including fees.
• How much you could save each month and over the entire loan period.
• The break-even point in months or years.

It's important to remember that calculators provide estimates. The actual rates and fees you receive from a lender might differ slightly. Always get a Loan Estimate from your lender to see the precise terms and costs before committing to a refinance.

Many online tools are available, and they often work similarly. You'll input your current mortgage details and then explore different scenarios for a new loan. Some calculators even allow you to factor in different loan types, like fixed versus variable rates, to see how they might affect your long-term financial picture.

Wrapping It Up

So, looking at mortgage refinance rates in December 2025, it's clear there's a lot to think about. Rates can change, and what looks good on paper might have hidden catches, like extra fees or fewer options down the road. Remember, the lowest rate isn't always the best deal for your specific situation. It’s really about finding that sweet spot that fits your financial goals, whether that's saving money now or paying off your home faster. Take your time, compare your options carefully, and don't be afraid to ask questions. Getting the right mortgage refinance can make a big difference in your wallet.

Frequently Asked Questions

Should I always pick the lender with the lowest interest rate?

Not necessarily! While a low rate is appealing, it might come with extra rules or bigger penalties if you need to pay off your mortgage early. Sometimes, a slightly higher rate with more flexibility, like being able to make extra payments without huge fees, is a better deal for your long-term plans. It's smart to talk to a mortgage expert to see what fits you best.

What are mortgage prepayment options?

Prepayment options let you pay extra money towards your mortgage's main balance. This can save you a lot of money on interest and help you pay off your home faster. You can often make a lump sum payment once a year, usually up to a certain percentage of your mortgage, or sometimes make smaller extra payments throughout the year.

When should I think about refinancing my mortgage?

People refinance for different reasons. Maybe you want to change the length of your mortgage, add someone to the property's title, or combine different loans. Refinancing can also involve changing your mortgage type or lender. It's a way to adjust your mortgage to fit your current needs.

How do mortgage rate holds work?

A mortgage rate hold lets you lock in an interest rate for a certain period, usually up to 150 days. You can do this when you first get approved for a mortgage or when you're renewing or refinancing. This protects you if rates go up before you finalize your mortgage.

What's the most common mortgage term length in Canada?

The most popular choice for mortgages in Canada is a 5-year fixed rate. This means your interest rate stays the same for five years. While it's popular for its predictability, it's important to think about your future plans. If you might need to pay off your mortgage early, be aware of potential penalties.

Is a variable rate mortgage better than a fixed rate?

Variable and fixed rates both have pros and cons. Variable rates can sometimes save you money over time because they can go down, but they can also go up. Fixed rates offer more certainty because your payment stays the same. The best choice depends on your financial situation and how much risk you're comfortable with.