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TD Fixed Interest Rate Mortgages
A fixed rate mortgage, simply put, is a mortgage where your interest rate and monthly payments stay the same for the duration of the term, whether it's 6 months, 1 year, 2 years, 3 years, 4 years, 5 years, 6 years, 7 years, or even 10 years. Fixed rate mortgages are excellent for people who like stability in their mortgage interest rate and monthly payments because of the predictability it offers, as opposed to a variable rate mortgage where the monthly payments don't change but if the TD Mortgage Prime Rate rises then the portion going towards interest will go up.
Comparing TD variable and fixed interest rate mortgages
|
Variable rate |
Fixed rate |
|
|---|---|---|
|
Interest rate |
Can go up or down over the term of a mortgage loan. |
Locked in and will not change over the term of a mortgage loan. |
|
Payment amount |
Does not change over the term, but if the TD Mortgage Prime Rate rises then the portion going towards interest will go up which means the amortization period will be extended and will need to be adjusted at some point in the future. |
Does not change over the term, with each payment covering both interest and principal. |
|
Term length |
5 years |
6 months, 1, 2, 3, 4, 5, 6, 7 or 10 years |
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Basics of fixed rate mortgages
- Annual Percentage Rate
The Annual Percentage Rate (APR) reflects the cost of borrowing over an entire term. It is normally higher than the variable interest rate because it includes some or all of the fees, as required, that apply to your mortgage loan in addition to interest. - Mortgage rate hold
A mortgage rate hold is when you lock in a specified mortgage rate for a set period. What this means is that, once you have been pre-approved, we'll hold your interest rate for the next 120 days subject to conditions. If the interest rate on the term chosen in your pre-approval goes up, we will hold the rate we pre-approved you for if you meet all other conditions. If the interest rate goes down during this time, you can ask to have your pre-approved interest rate adjusted to reflect the lower current rate. - Fixed rate open mortgages
An open mortgage is a mortgage that lets you pay off your mortgage partially or in full at any time without worrying about prepayment charges. More flexibility, more freedom, more options.
However, an open mortgage may have a higher interest rate than the same term that's closed to prepayment because of the added prepayment flexibility. - Fixed rate closed mortgage
In contrast to an open mortgage, a closed mortgage typically has a lower interest rate for the same term. Closed mortgages also have a prepayment limit, which means you are only allowed to prepay 15% of the original principal amount per year without any charges. If you want to pay more than 15%, prepayment charges may apply. - Convertible mortgages
If you want to start with an open mortgage and then lock into a closed mortgage, a 6-month convertible mortgage could be the right choice for you.
If we offer you a renewal, you can keep selecting a 6-month term until you're ready to move to a longer term. This enables you to pick a new, longer term any time you feel interest rates are favourable.
Common questions about fixed rate mortgages
If you're seeking predictability and stability in your budget, a fixed rate mortgage could be the right choice for you. Fixed rate mortgages help ease anxieties because the interest rate and the regular payments you make will stay constant for the term of your mortgage, even if interest rates rise. This means you'll know exactly what to budget for, throughout your term.
Our mortgage advisors can help you figure out which mortgage is better for your unique situation. Variable rate mortgages offer more flexibility as you can switch to a fixed rate when interest rates are favourable. When switching, the term selected must be at a minimum the lesser of three years or the remaining period of the original term. Fixed rate mortgages contrast that by offering stable interest rates for homebuyers. Of course, everyone and their economic situation is different, so the right plan will vary from person to person.
The main advantage of a fixed mortgage rate is that, whether interest rates go up or down during the term, your rate and regular payments would stay the same for the term selected. You can select a term length of 6 months, 1 year, 2 years, 3 years, 4 years, 5 years, 6 years, 7 years, or 10 years. This may offer you more comfort in your budgeting and gives you more stability. On the other hand, if interest rates fall during your term, your rate won't change. Ultimately, it's all about what you need and what you feel most comfortable with.
To pay off your mortgage, it could cost you a prepayment charge based on if you have an open mortgage or a closed mortgage. If you have a fixed interest rate with an open to prepayment term, you can pay off your entire mortgage without paying a prepayment charge. However, if you have a closed fixed rate mortgage, your prepayment charge will be the greater of three months' worth of interest or the Interest Rate Differential (IRD) amount. We advise you to speak with a Mortgage Specialist to understand any potential costs, as well as to go over your options, to help you see the full picture and help you make the decision that is right for you.
For fixed interest rate mortgages, the interest rate will not change over the course of a mortgage term, regardless of TD Mortgage Prime Rate fluctuations. As your interest rate is locked in, fixed rate mortgages offer the security of knowing your interest rate or monthly payments will not change over the term of your mortgage. However, you may see the impact of changes to rates when you renew.
Learn more about our Mortgage Terms or visit the glossary.