Guides William Lyon August 13, 2023 0 Comments

What is TD 5 Year Fixed Mortgage Rate?

Getting a mortgage is one of the biggest financial decisions you’ll make. With so many options, it can be confusing to know which mortgage type and rate is right for you. One popular option is the TD 5-year fixed mortgage rate offered by TD Canada Trust.

Understanding Fixed vs Variable Mortgage Rates

The first thing to understand is the difference between fixed and variable-rate mortgages.

With a fixed-rate mortgage, the interest rate is locked in for the entire term, usually 1, 2, 3, 4, 5, 7, or 10 years. This means your monthly mortgage payment will be the same for the whole term, providing consistency in your budget.

A variable-rate mortgage has an interest rate that fluctuates based on changes to the prime rate. Your payments go up and down accordingly. This option usually starts with a lower rate but carries some risk that rates could rise significantly.

Many homebuyers prefer fixed rates to have peace of mind knowing their payments will be stable even when interest rates trend up.

Features of the TD 5-Year Fixed Mortgage

The TD 5-year fixed mortgage offers the security of an interest rate that is guaranteed not to change for 5 years.

Some key features include:

Term – 5 years
Rate – TD offers competitive 5-year fixed rates, which are generally lower than longer-term options
Prepayment – Ability to pay off a certain percentage (usually 15%) of the mortgage annually without penalty
Portability – An option to transfer the mortgage to a new property when you move
Assumability – In some cases, the mortgage can be assumed by a new owner if you sell the home before the end of the 5-year term
Payment Frequency – Choose between monthly, biweekly, weekly, or accelerated payments
Amortization – Up to 30 years, meaning the mortgage is paid off in 30 years or less

Rates can vary depending on factors like your down payment, credit score, loan-to-value ratio, and other qualifications. TD mortgage advisors can provide customized rate quotes.

How Does the 5-Year Fixed Rate Compare?

Here’s how TD’s 5-year fixed mortgage compares to other popular options:

Lower than 10-year fixed – The 5-year rate is typically 0.20% to 0.50% lower than TD’s 10-year fixed rate mortgage. However, the 10-year term provides rate security for twice as long.
Higher than short-term fixed – A 5-year fixed rate is usually 0.25% to 0.75% higher than 2- or 3-year fixed terms. The tradeoff is having a locked-in rate for more years.
Higher than variable – Variable rate mortgages start lower than 5-year fixed rates. But variable rates fluctuate so they could exceed the 5-year fixed rate in the future.
Higher than special offers – TD sometimes promotes short-term and variable rate mortgages with temporary discounts that undercut the 5-year fixed rate. But these specials are for limited times only.

In short, the 5-year fixed rate balances reasonably competitive rates with longer-term stability. It hits a sweet spot between short and long fixed terms.

When is a 5-Year Fixed Mortgage a Good Option?

There are a few situations when choosing a 5-year fixed-rate mortgage could be ideal:

You want payment stability without committing to a higher decade-long fixed rate.
You plan on staying in the home long enough to renew into another fixed rate at the end of the 5-year term.
Interest rates are expected to increase and you want to lock in a low rate now.
Your financial situation is unlikely to change significantly in 5 years.
You prefer knowing your monthly costs will be fixed for the medium term.
You are comfortable with the moderately higher payments of a 5-year fixed rate compared to short-term options.

If your priority is payment consistency for the next few years, then a TD 5-year fixed-rate mortgage could be a great choice.

The Mortgage Renewal Process

One thing to note is that your 5-year fixed term isn’t permanent. Once your 5 years are up, the mortgage will need to be renewed. You have some options at renewal time:

Renew with TD for another fixed term – You can stick with TD and renew for another 5-year fixed term or choose a different term length (1-year, 3-year, etc). However, the interest rate will be reset at current market rates.
Renew early – TD allows renewing an existing mortgage 120 days before the maturity date with no penalties. This locks in current interest rates.
Switch lenders – You can shop around and transfer the mortgage to a new lender. There might be discharge/transfer fees.
Pay off the balance – If you’ve paid down enough principal, you may be able to pay off the remaining mortgage balance and avoid renewing.

A mortgage specialist can explain the renewal process and help you find the best option for your situation when your 5-year term ends.

Applying for a 5-Year Fixed Mortgage with TD

Ready to apply for a competitive 5-year fixed-rate mortgage from TD? Here are some tips for getting started:

Get pre-approved – Work with TD to get pre-approved before house hunting. They’ll assess your financial situation and provide a pre-approval letter stating the maximum mortgage you qualify for.
Compare rates – Have a TD mortgage specialist provide a personalized 5-year fixed rate quote. Ask them to compare it against other terms to see which option provides the best value.
Submit full application – Once you have an offer accepted on a home, submit a full mortgage application including all required documents. TD offers a fast approval process.
Lock in your rate – Rates fluctuate daily, so it’s a good idea to lock in your rate as soon as possible after approval to secure the lowest possible interest rate.

With branches across Canada, it’s easy to connect with a TD mortgage specialist and get answers to any questions about the 5-year fixed mortgage option. They can guide you through the mortgage process from pre-approval to funding.

The Bottom Line

TD’s 5-year fixed-rate mortgage provides an appealing balance of reasonable rates and medium-length rate security. While you pay a slight premium over short-term options, you benefit from consistent, predictable monthly payments for 5 full years. If you want to lock in your housing costs for the next few years without committing to a decade-long term, a 5-year fixed mortgage could be a great fit.

Empower your home ownership journey with the help of our up-to-date TD Mortgage Calculator, calculating Monthly Payments for Your Dream Home