Mortgage Laddering

Often the economic climate and the direction of interest rates can be difficult to predict. There are many questions that need to be answered:

  1. Should I lock in my interest rate?
  2. If I do lock in my interest rate, how long should I lock it in for?
  3. Should I choose a variable rate mortgage instead of a locked in rate?

Mortgage Laddering is a strategy that allows you a flexible solution to challenging questions. Instead of putting all of your eggs in one basket, you can choose to split your mortgage into two or more mortgages. Each component can have its own rate, term, amortization, and payment.

The three aspects of laddering your mortgage are as follows:

1. Choose your mortgage mix

  • For example, a $250,000 mortgage can be split into $125,000 5-year fixed interest mortgage and a $125,000 variable rate mortgage.
  • This allows you to take advantage of low interest rates today and reduce your exposure to rate increases in the future.

2. Choose your amortization and payment schedule

  • For example, a 5-year fixed mortgage with a 30 year amortization and a variable rate mortgage with a 15 year amortization.
  • This provides an opportunity to pay off your mortgage faster and save total interest paid.

3. Choose your renewal dates.

  • If you decide to go with fixed interest mortgages you can Stagger the renewal dates.
  • For example, your mortgage terms could be set to renew in 1 year and 5 years.
  • This can help limit your exposure to interest rate fluctuations.

Current Mortgage Rates

Term Rate
Prime Rate (P) 3.20%
Closed Variable P – 0.90%
Open Variable P + 0.80%
6 Month Closed 4.75%
1 Year Closed 2.94%
2 Year Closed 2.94%
3 Year Closed 2.99%
4 Year Closed 3.04%
5 Year Closed 2.99%
7 Year Closed 3.64%
10 Year Closed 4.04%
As of October 18, 2017. Rates subject to change without notice, OAC, E&OE