STUCK IN A HIGH-RATE 10-YEAR FIXED MORTGAGE?

Many homeowners locked into a 10-year fixed mortgage during uncertain economic times—often at higher rates than shorter terms. When today’s lower rates appear, it’s common to feel trapped, frustrated, and unsure whether anything can be done.

Here’s what you need to know before assuming you’re stuck 👇

1️⃣ The 5-Year Rule Most Homeowners Don’t Know

A key Canadian rule allows borrowers to break a 10-year mortgage with a far smaller penalty once they pass the five-year mark.

✔️ penalty capped at 3 months’ interest

✔️ applies regardless of lender policy

✔️ IRD does NOT apply after year five

This law exists specifically to protect borrowers in long-term contracts.

2️⃣ Why many people overestimate the penalty

Most homeowners never calculate the true cost—they just assume the penalty is massive.

✔️ 3 months’ interest is often under $2,000

✔️ add legal fees of $500–$800

✔️ no IRD calculations after year 5

The real penalty is usually far lower than what people fear, and far lower than staying in an uncompetitive rate.

3️⃣ Comparing today’s lower rates to your current payment

If you locked in years ago, your rate may now be 1–3% higher than what’s available today.

✔️ lower payments

✔️ lower interest costs

✔️ improved cash flow

✔️ opportunity to shorten amortization

Even a modest rate reduction can create powerful long-term savings.

4️⃣ Using the lower rate to pay off your mortgage faster

Refinancing into a lower rate isn’t just about reducing payments — it’s also an opportunity to pay the home off sooner.

✔️ increase payments within lender limits

✔️ switch to accelerated bi-weekly

✔️ apply lump-sum prepayments annually

These small adjustments can save tens of thousands in interest over time.

5️⃣ When refinancing DOES make sense

Refinancing becomes a smart move when:

✔️ today’s rate is significantly lower

✔️ penalty is manageable

✔️ you plan to stay in the home

✔️ you want to consolidate debt

✔️ you want to reduce amortization

Running the numbers is essential before deciding.

💬 Final Thought

A 10-year mortgage doesn’t mean you’re stuck forever. After five years, Canadian law dramatically reduces your penalty—unlocking options most borrowers don’t realize they have. Lower rates, better payments, and faster payoff strategies may all be within reach.

If you’d like a personalized penalty calculation and savings comparison, message The Frontline Mortgage Group anytime.