Looking for the Best 1-Year Variable

Mortgage Rates in Canada?

Compare the latest 1-year variable mortgage rates from major banks, credit unions and mortgage brokers.

What is a 1-year variable mortgage rate?

One-year variable mortgage rates are very rare and few people ever get one. They’re unpopular with lenders as well since they’re not very profitable. In most cases, a lender would prefer to have a client in a longer-term variable mortgage since the borrower remains a client for longer and generates more interest revenue.

Since one-year variable rates are so rare, there’s typically premiums attached, making them a more expensive rate choice. Those wanting a one-year mortgage rate are better off choosing a one-year fixed mortgage, as there are many more options available and the rates are lower.

Variable mortgage rates are tied to a lender's prime rate, which means the interest rate can fluctuate over the duration of the term if the prime rate rises or falls. Fixed rates, on the other hand, provide greater payment stability to borrowers as the rate and monthly payments remain fixed for the length of the term. Learn more about the differences between variable and fixed rate mortgages.

Pros of a 1-year variable mortgage rate

Like any decision you make, there are pros and cons that go along with that decision. Depending on what you're looking for in a mortgage and where you see your mortgage heading after 1 year, here are some of the pros of a 1-year variable mortgage.

Usually a lower monthly payment and interest rate: But because it’s tied to the prime rate, it can increase at any point of the term.
Can be converted to a fixed rate: Most lenders will let you switch from a variable to a fixed rate, but not the other way around.
Less penalty for breaking the mortgage: With a variable rate, the penalty for breaking your mortgage is usually only three months’ worth of interest payments.

Cons of a 1-year variable mortgage rate

And on the other side of pros, there are cons. While these cons aren't necessarily bad, they're some factors to consider.

Financial uncertainty: Your mortgage being tied to the prime rate can cause some uncertainty with not knowing if and when your rate will increase and by how much.
Budgeting: Never knowing if and when your rate will increase can make budgeting and financial planning more difficult, especially for the long term.