Interesting. I had no idea that this is how mortgages work in Canada. I'm glad I have access to 30-year open mortgages.

I used

bankrate.com's mortgage calculator to do the math for you. You'll have to click the lower blue button to make the amortization table appear, then look down 5 years. It's not perfect, but it works.

If I understand it correctly, then a 5-year mortgage is amortized over 25 years, and when you renew it, you'll get a smaller mortgage amortized over 20 years. Then a 15-year amortization on the next renewal, etc., getting a new rate each time you renew. Is this correct? For a 10-year mortage I assumed you'd still do a 25-year amortization.

Assuming the assumptions I made are correct, you're better off with the 5-year closed mortgage over the 10-year closed mortgage as long as interest rates don't go up significantly higher than 5%. I didn't bother with the variable 5-year -- it depends too heavily on the Canadian real estate market (which I know nothing about) for me to make any reasonable estimates of the cost. The numbers:

3.49% & 5.00%:

Payment: $975.17, $1110.66/mo

Equity after 10 years: $54,550.81

Interest Paid: $71,184.41

4.39%:

Payment: $1071.73/mo

Equity after 10 years: $53,867.84

Interest Paid: $74,740.27

The risk you're taking with the 5-year is that interest rates could go up higher than 5%, in which case the 4.39% 10-year mortgage is the cheaper option. On the other hand, if they go up to just 5%, or if they're even lower, the 5-year mortgage wins. Increased cash flow (~$96/mo) in those first 5 years could be invested, as well, helping to offset the higher payments in the subsequent 5-year period. Money now is worth more than money later.

Also, please note that I've only ever been to Canada one time for a couple hours, so there may be other factors such as tax rules regarding mortgages that I don't know anything about.

If you've got any experience with Excel, it's fairly easy to use the PMT() function to set up amortization tables that you can manipulate to math this type of thing out. Otherwise, any mortgage calculator that allows you to see the full amort table should work, even though it's not ideal.

edit: With such low rates, having the ability to pay off the 10-year after 5 years isn't really that big of a benefit. Even if you were in a position to pay it off, you'd be better off keeping the mortgage and investing your money elsewhere, getting higher returns than 4.39%.