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Choosing a mortgage term is rarely straightforward. It requires analysis of your goals, psychology, finances and rates. One of the questions that must be answered is: which term is the best value based on current rates. Until now, that’s been difficult to estimate. The tool you see before you is designed to make that process easier.
RATESDOTCA's powerful new Rate Navigator is a one-of-a-kind tool that takes your future rate assumptions and tells you which terms are likely to offer the lowest borrowing costs.
While hundreds of websites have standard mortgage calculators, the Rate Navigator is unique. It’s the only calculator in Canada to project how each term will fare over the next five years. It then ranks all terms so you can see which may be most economically beneficial, based on the stated assumptions (including your future interest rate assumptions).
To use the Rate Navigator, simply:
The Rate Navigator calculates amortization scenarios for each term and series of terms over a five-year period. In other words, it estimates how much interest you’d pay by choosing a:
The Rate Navigator ranks each scenario based on total borrowing costs, including estimated switching costs (which you’d pay if you switched lenders to get a better rate).
The rates on future renewals are based on a spread above the 5-year yield (in the case of fixed rates) and a discount from prime rate (in the case of variable rates). RATESDOTCA uses historical spread estimates in its calculations.
The Rate Navigator calculates the projected interest costs for each mortgage term and series of terms over a common comparison period (five years).
For example, it can account for a one-year term renewing into a three-year term, and a subsequent renewal back into a one-year term as opposed to sticking with a single five-year term.
It ranks the three terms with the lowest expected borrowing costs over five years, making it easy for mortgage shoppers to narrow down the mortgage terms with the lowest estimated borrowing costs.
Performing such calculations manually would take hours. The Rate Navigator makes it possible in one second.
Future rates are unknowable. All one can do is estimate to the best of their ability. We include current economist consensus rate forecasts by default to get you started. But you can adjust these forecasts as you see fit.
Note that estimates of future interest rates can deviate significantly from forecasts.
No. Term selection entails many considerations like risk tolerance, your finances, your employment, your five year plan, etc. You should consider all factors and not rely mainly on this tool to choose your mortgage.
Prime rate, which typically only changes following Bank of Canada rate decisions, is always used to calculate variable rates.
The five-year government bond yield typically leads fixed mortgage rates. As a result, future expectations of bond yields provide a rough roadmap as to future fixed rate expectations.
The Rate Navigator uses the lowest rates on RateSpy based on the criteria you enter. If your mortgage amount is greater than 80% of your home value, for example, it will use the lowest default insured rates.
If your mortgage type is “refinance” it will use uninsured rates.
Use your best judgement based on your current economic outlook. The default rates show you what professional forecasters expect.
The most powerful part of this tool is its ability to let you model extreme scenarios like significant rate increases.
See and compare the best mortgage rates in Canada.
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