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The 7-year term is one of the longer mortgage terms available, and also one of the more unpopular. Only about 1% of Canadian borrowers choose this term.
One of the reasons is because it offers little additional rate protection vs. the 5-year fixed, yet it's priced notably higher.
Another strike against the 7-year term is that a minority of borrowers under 50 will remain in their home for more than seven years. This means the odds are high that a borrower will need to pay a penalty to break the mortgage early.
Prepayment penalties for fixed rates can be costly, particularly for clients of the country's big banks. That's because their penalties are calculated using their posted rates instead of actual rates.
For those who plan to stay put for the long-term and who value rate stability above all else, the 7-year fixed mortgage term could be a good candidate.
