1, 3, 5-Year Fixed Mortgage Terms Explained

When you take out a fixed-rate mortgage in Canada, you don't just pick a rate — you pick a term: the number of years your rate and conditions stay locked. One, three, and five-year terms are the most popular, and the right choice can save (or cost) you thousands. Here's how term length works and how to choose.

Key takeaways

• A mortgage term is how long your rate and contract are locked — not how long until the loan is paid off.
• The 5-year fixed is Canada's most popular term; shorter terms offer flexibility, longer terms offer stability.
• Your term and your amortization are two different things.
• Shorter terms let you renew sooner if rates fall; longer terms protect you if rates rise.
• HOMEH gives eligible buyers the industry's highest Cashback Rebate. Sellers list for 1%, or free when they also buy with HOMEH within 6 months, or $395 + HST with a Mere Posting.

Term vs amortization: don't confuse them

Your term is the length of your current mortgage contract — commonly 1, 3, or 5 years. When it ends, you renew (or switch lenders) at whatever rates are available then. Your amortization is the total time to pay off the entire mortgage, often 25 or 30 years. You'll go through several terms over one amortization.

For a full primer on how the pieces fit together, see our pillar guide on how mortgages work in Canada and our deep dive on how mortgage amortization works.

Short vs long fixed terms

There's no universally 'best' term — it depends on where you think rates are heading and how much certainty you want. Here's the trade-off at a glance.

A shorter term means you renew sooner — great if rates drop, risky if they climb. A longer term locks in your rate for years, which is comforting when rates are rising but can trap you if rates fall and you'd have to pay a penalty to switch. Learn how those penalties are calculated in mortgage penalties explained.

Why the 5-year fixed dominates in Canada

The 5-year fixed is the default choice for many Canadian buyers because it balances a predictable payment with a competitive rate, and it lines up with how lenders price their products. It also means you only re-qualify and shop for rates once every five years.

Still, the popular choice isn't always the right one for you. If you might move or refinance soon, a shorter term can save a painful break penalty. Compare your options against a fixed vs variable mortgage rate as well.

How to choose your term

Ask yourself three questions: How long will I keep this home? Do I value a stable payment or flexibility? And where do I think rates are headed? If you plan to move, a shorter term or a portable mortgage may suit you — see what is mortgage portability.

Rates are set against the backdrop of Bank of Canada policy and bond markets, which is why no one can perfectly time them — read how mortgage rates are determined. When your term ends, our mortgage renewal guide helps you get the best deal.

Lower your overall cost with HOMEH

No matter which term you pick, eligible HOMEH buyers receive the industry's highest Cashback Rebate — real money toward your home. Sellers list for 1%, or free when they also buy with HOMEH within 6 months, or $395 + HST with a Mere Posting. Estimate yours with the cashback calculator.