# 3-Year vs 5-Year Fixed at Renewal 2026: 3.94% or 4.14% > Live card 3.94% vs 4.14%. Cheaper term is not automatically better. $49/month on $470,980 / 20y. Category: 2026 Renewal Strategy Author: Ratellow Research Team Published: 2026-08-29T20:00:00.000Z Source: https://ratellow.com/blog/3-year-vs-5-year-fixed-renewal-2026 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 | Term | Rate (24 Aug 2026) | Monthly P&I ($470,980, 20 years) | |---|---|---| | 3-year fixed | 3.94% | **$2,831** | | 5-year fixed | 4.14% | **$2,880** | | Gap | 20 bp | **$49** | Compare the two coupons side by side in the [renewal comparison view](/mortgages/renewal-calculator/comparison) 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](/guides/short-term-fixed-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](https://www.canada.ca/en/financial-consumer-agency/services/mortgages/reduce-prepayment-penalties.html). ## 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](/faqs/strategy/how-does-the-stress-test-differ-for-fixed-vs-variable-in-2026). ## 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](/guides/renewal-180-day-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. ## Sources - Canadian mortgage rates — https://ratellow.com/mortgages/rates - Mortgage prepayment penalties — https://www.canada.ca/en/financial-consumer-agency/services/mortgages/reduce-prepayment-penalties.html - Short-term fixed at renewal — https://ratellow.com/guides/short-term-fixed-renewal - Renewal comparison — https://ratellow.com/mortgages/renewal-calculator/comparison