- Terms commonly run from 1 to 10 years; the 5-year is the most common reference.
- Fixed rates in Canada are compounded semi-annually, not in advance (Interest Act s.6).
- Typical posted rates (Bank of Canada, 2026-11-11): 1-year 5.49%, 3-year 6.05%, 5-year 6.19%.
- Breaking early: the greater of 3 months’ interest and the IRD.
How do fixed-rate mortgage terms work?
Term length is a bet on stability. A shorter term renews sooner (at whatever rates are then), a longer term buys certainty. For terms over five years, the Interest Act lets individual borrowers repay after the fifth anniversary with 3 months’ interest.
Fixed-rate payments are calculated with semi-annual compounding. The payment calculator uses the same convention.
How do the big banks’ fixed-rate penalties differ?
Each bank publishes how it calculates the penalty on a fixed closed mortgage. Read them side by side before you choose:
| Bank | Penalty method, in the bank’s words |
|---|---|
| RBC Royal Bank | Greater of 3 months’ interest or IRD vs RBC’s posted rate for a similar term, less your rate reduction. Variable: 3 months’ interest. |
| TD Canada Trust | Higher of 3 months’ interest or IRD using TD’s posted rate for a similar mortgage minus your discount. Variable: 3 months’ interest. |
| Scotiabank | Greater of 3 months’ interest or IRD vs Scotiabank’s posted rate for the closest term, less your discount. Variable: 3 months’ interest. |
| BMO Bank of Montreal | Higher of 3 months’ interest or IRD vs BMO’s posted rate for the closest term, taking your discount into account. Variable: 3 months’ interest. |
| CIBC | Greater of 3 months’ interest (at your rate + discount) or IRD vs CIBC’s current posted rate. Variable: 3 months’ interest at CIBC Prime. |
| National Bank | Higher of 3 months’ interest or 1 month’s interest (max $500) plus the interest differential. Variable: 3 months’ interest. |
Which fixed term is cheapest at the big banks right now?
The lowest special isn’t on the 5-year: it was the 2-year (4.84%, CIBC). Here are the lowest and highest specials and the range of posted rates the six banks published for each closed fixed term on November 2, 2026. Scotiabank shows specials only as APRs, so they are not included. Compare all six banks by term on the rate grid.
| Term | Lowest special (bank) | Highest special | Posted rates |
|---|---|---|---|
| 1-year | 5.09% (CIBC) | 5.49% | 5.14% to 5.74% |
| 2-year | 4.84% (CIBC) | 5.19% | 4.94% to 5.74% |
| 3-year | 4.94% (BMO) | 5.24% | 6.05% to 6.25% |
| 4-year | 5.09% (National Bank) | 5.24% | 5.99% to 6.19% |
| 5-year | 5.14% (RBC, BMO, National Bank) | 5.34% | 6.09% to 6.49% |
| 7-year | 5.25% (RBC) | 5.54% | 6.30% to 6.50% |
| 10-year | none published | — | 6.79% to 6.90% |
Is a 7- or 10-year fixed term worth it?
A longer term buys longer certainty, usually at a slightly higher rate. At RBC on November 2, 2026, the 7-year special was 5.25% against 5.14% for the 5-year: $2,979.59 a month on $500,000 over 25 years, against $2,948.00.
Terms over five years also get a legal cap on the penalty. Under Interest Act s.10, after the fifth anniversary an individual borrower can repay with no more than 3 months’ interest (it doesn’t apply to a mortgage given by a corporation). Break that 7-year with 15 months left, after posted rates have fallen 1 point, and the charge is $5,704 on the $434,579 balance; RBC’s own formula would give $9,561. Before year five, the bank’s usual penalty applies.
Why does compounding matter for a fixed rate?
Canadian fixed rates are quoted with semi-annual compounding (Interest Act s.6). At RBC’s 5.14% 5-year special, semi-annual compounding is an effective annual rate of 5.206%; the same rate compounded monthly would be 5.263%. On $500,000 over 25 years that is $2,948.00 a month against $2,963.88. When you compare quotes, make sure both use the same convention; the payment calculator lets you choose.
What happens when your fixed term ends?
At maturity you can renew, switch lenders or repay without a penalty. Your bank must send a renewal statement at least 21 days before the term ends (FCAC), and most big banks let you lock in a renewal early: RBC up to 120 days before, BMO up to 180 days, Scotiabank up to 6 months and National Bank up to 4 months, with no penalty. TD says to start 120 days before maturity, and CIBC says all its mortgages become open at the end of the term. The new rate applies to the balance you still owe, so price a few renewal rates in the renewal guide well before the date.
What fixed-rate mistakes should you avoid?
- Picking the term by rate alone when you might move or refinance. Check the penalty method and portability first.
- Ignoring prepayment privileges, which range from 10% to 20% a year at the big banks.
- Assuming a fixed rate removes rate risk. It removes it for the term; at renewal you take the rates of the day.
- Locking a long term when you only need a short pause. RBC, TD and BMO list a 6-month convertible, and Scotiabank says its 6-month flexible/closed term can be locked into a closed fixed term of 1 year or longer without a prepayment charge.
Worked example: RBC 5-year vs 3-year special on $500,000
At RBC’s published specials (November 2, 2026), the 5-year (5.14%) costs $2,948.00 a month and leaves $443,505 at renewal; the 3-year (5.09%) costs $2,933.69 and renews two years sooner at whatever rates are then.
| 5-year | 3-year | |
|---|---|---|
| Rate | 5.14% | 5.09% |
| Monthly payment | $2,948.00 | $2,933.69 |
| Interest over the term | $120,385 | $73,236 |
| Balance at renewal | $443,505 | $467,623 |
Computed by this site’s engine from each bank’s published rates (November 2, 2026) and the rules cited below. An example, not a quote.
What this means for you
- Choose term length by how sure you are of your plans, not just the rate.
- If you might move, check portability and the penalty method first.
- Compare all six banks by term on the rate grid.
Rules change. Every figure on this page links to the official source and shows when we checked it. If something looks out of date, tell us and we will re-check.
Frequently asked questions
Fixed or variable?
Fixed gives a known payment and usually a larger penalty if broken; variable usually moves with prime and carries a 3 months’ interest penalty. If there is a real chance you will move or refinance within the term, factor in the penalty with the bank vs broker tool’s break scenario.
Can I break a 7- or 10-year term for 3 months’ interest?
After the fifth anniversary, yes, if you are an individual borrower: Interest Act s.10 limits the charge on a term longer than five years to 3 months’ interest. It doesn’t apply to a mortgage given by a corporation, and before year five the bank’s usual penalty applies.
How much extra can I pay on a fixed mortgage without a penalty?
It depends on the bank and product: a lump sum of up to 10% of the original principal a year at RBC and National Bank, 15% at TD, 10%, 15% or 20% at Scotiabank and CIBC depending on the options or product, and 20% at BMO (10% on Smart Fixed). Payment increases are separate; see products.
Sources
- Valet API: posted conventional mortgage rates (V80691333–35), prime (V80691311), policy rate (V39079) — Bank of Canada, checked Oct 31, 2026
- Interest Act (R.S.C. 1985, c. I-15), ss. 6 and 10 — Justice Laws, checked Oct 31, 2026
- Reduce or avoid prepayment penalties — FCAC, checked Oct 31, 2026
- Mortgage terms and amortization — FCAC, checked Oct 31, 2026
- Renewing your mortgage — FCAC, checked Oct 31, 2026
- Mortgage rates — RBC Royal Bank, checked Nov 2, 2026
- Mortgage rates — TD Canada Trust, checked Nov 2, 2026
- Mortgage rates — Scotiabank, checked Nov 2, 2026
- Today’s mortgage rates — BMO, checked Nov 2, 2026
- Mortgage rates across Canada — CIBC, checked Nov 2, 2026
- Mortgage rates — National Bank, checked Nov 2, 2026
- Fixed rate mortgages — Scotiabank, checked Oct 31, 2026
- Pay down your mortgage faster (Double-Up, lump sums, skip a payment) — RBC Royal Bank, checked Oct 31, 2026
- TD mortgages and rates (products) — TD Canada Trust, checked Oct 31, 2026
- Understanding mortgage prepayments and charges — Scotiabank, checked Oct 31, 2026
- Paying off your mortgage faster (prepayment privileges, prepayment charges, portability) — BMO, checked Nov 2, 2026
- Mortgage prepayment (privileges and prepayment charges) — CIBC, checked Oct 31, 2026
- Pay off your mortgage faster (prepayment and charges) — National Bank, checked Oct 31, 2026
- Renewing your mortgage — RBC Royal Bank, checked Oct 31, 2026
- Mortgage renewal process — TD Canada Trust, checked Oct 31, 2026
- Mortgage renewal — Scotiabank, checked Oct 31, 2026
- How to renew your mortgage — BMO, checked Oct 31, 2026
- Renew your mortgage — CIBC, checked Oct 31, 2026
- Mortgage renewal — National Bank, checked Oct 31, 2026
Educational information only, not financial, legal or tax advice. BankMortgages.ca is independent and is not affiliated with, endorsed by or paid by any bank named on this site. Bank terms change: confirm every rate and term with the lender and the official sources linked on each page before you act. Read the full disclaimer.