Should you take the 3-year or the 5-year at renewal?

The live card on 24 August 2026 is 3.94% (3-year fixed) versus 4.14% (5-year fixed). The cheaper coupon is not automatically the better renewal. On the same $470,980 / 20 years file used for payment-shock math, the gap is $49 a month.

TL;DR

• 3.94% pays $2,831; 4.14% pays $2,880. Difference: $49/month.
• Take the 3-year if you can reprice in 2029 below about 4.48% and still come out ahead on cash, or if you expect to sell or break inside three years (IRD on a 5-year leftover is the expensive mistake).
• Take the 5-year if the payment must not be a decision again before 2031.
• The 5-year variable at 3.49% is a different product. Do not treat it as a third "fixed."

$49 is the whole spread on this file

Compare the two coupons side by side in the renewal comparison view if you want a third offer on the same screen. The widget above is this article's worked example only.

When the 3-year wins on cash

You pay $49 less per month for 36 months (about $1,760). You then reprice the remaining balance in 2029. The 5-year borrower is still at 4.14% through 2031.

A simple hurdle: if the 2029 3- or 5-year coupon you actually get is below about 4.48%, the 3-year path has the better cash out-turn versus sitting at 4.14% for all five years. That 4.48% is an interest-cost break-even on this amortization, not a forecast. Nobody can promise 2029 pricing. Use it as a "what would have to be true" line, then decide whether you can live with a second renewal.

Shorter-term structure notes: short-term fixed at renewal.

When the 5-year is the point

If household cash flow cannot take another +$400-class surprise in 2029, 4.14% for five years is the product. You are buying a payment that holds through 2031, not maximizing the option to re-shop. That is a preference, not a market call.

Selling or breaking inside three years

IRD on a 5-year with two years unused can dwarf the $49/month savings of having "picked the cheaper 3-year later." If a sale, divorce, or move-up is plausible before 2029, start at the 3-year (or an open/convertible discussion with the lender). Penalty primer: FCAC on prepayment penalties.

The 3.49% variable is not a 3-year fixed

Variable is prime 4.45% minus the posted discount. It can beat both fixed coupons on a hold-then-cut path and lose if prime steps up. Stress-test attachment does not change because you picked a 3-year versus a 5-year on a stay or straight switch. Term length is not what turns on the MQR; refinance / extra money / longer amort is. Fixed-versus-variable qualification detail: stress test for fixed vs variable.

How far out to lock

Use the 120–180 day hold so you are not choosing 3 vs 5 inside the last three weeks with one letter on the table. Rate-hold window.

Frequently asked questions

Is the 3-year always cheaper?

It is cheaper this month by $49 on this file. It is not cheaper over five years unless 2029 pricing cooperates, or you exit early and avoid 5-year IRD.

Should I take 3.49% variable instead?

Only if you want a payment that can move with prime. It is not a 3-year or 5-year fixed. Model it separately.

Does choosing a 3-year instead of a 5-year change the stress test?

No, not on a stay or straight switch. The test is about whether the mortgage is newly underwritten with extra money or a longer amortization, not about term length.

How far ahead can I lock?

Most lenders: 120 days; some 180. Lock both a 3-year and a 5-year hold if the lender will write both, then pick later.