As an illustration, the best six-month variable rate right now is close to 3 percent, while the best five-year rate is a little over 5 percent.

"There's a huge spread in those rates, and for that variable rate to catch up from the three to the low five, it'll be a significant, significant increase in prime, which is not going to happen over the short term," counsels Lee Welbanks, a mortgage consultant with The Mortgage Coach in Toronto.

"Yes, in the five-year term, there is the realistic possibility that [variable rates] might catch up somewhere down the line, but taking advantage of the lower interest rate now, on the early part of your mortgage, is most important, because that's where you're paying the most interest on it."

The variable rate will mean smaller mortgage payments in the short term, but the downside is a lack of stability. If you lock in for five years, on the other hand, you pay the same amount every month for five years. Not only that, you can project how much you'll have paid off at the end of that period.

With a variable rate, interest rates are adjusted every six months, which means your monthly payments will likely change every six months. As a result, you simply can't divine how much you'll have paid off in five years. Luckily, if the market becomes too volatile for you to bear, you can lock into a fixed term at any point.

The long-and-short mortgage
Introduced by Scotiabank earlier this year, this product tries to exploit the inherent advantages of a fixed term (constancy and peace of mind) and a variable plan (lower interest) by splitting your mortgage into two different interest rates.

On a $300,000 mortgage, half would be locked in a five-year fixed term and half would float at a variable rate that is reset every six months. That might mean paying 5.25 percent (for five years) on $150,000 and 3.75 percent (right now) on the other $150,000. If rates start to climb, you can lock the variable portion in.

While this scheme may pose a compromise, it forces homeowners to think about their mortgage not as one sum but two competing entities. Given the current trend in interest rates, in the near term, a couple that takes a long-and-short mortgage is bound to pay less total interest on their mortgage than a couple that locks the total $300,000 in at 5.25 percent.

If rates rises and you decide to lock in the variable half of your mortgage, the new five-year rate will inevitably be higher than the already secured half of your mortgage. Meaning: you might have been better off financing the total sum at 5.25 percent to begin with.

The no-money-down mortgage
A purchaser must come up with at least five percent of the sum of a mortgage in order to be underwritten by the nation's two mortgage insurers, the Canada Mortgage and Housing Corporation (CMHC) and GE Capital Mortgage Insurance Company (GEMICO). Some wannabe buyers, however, can't muster a 5-percent down payment.

So lenders introduced the no-money-down mortgage, or cash-back mortgage, in which the bank gives you 5 percent of the total mortgage of your house in order to sign you up as a borrower. This scheme has ushered a lot of buyers into the market, but it's not without its drawbacks.

A cash-back mortgage commands a higher interest rate, higher insurance rate and high monthly payments. Unless you expect a salary boost, this scheme could make you house-poor. And should you want to opt out of the mortgage before the end of its term, you have to pay back a portion of your "gift" to the bank.

"I typically try to steer people away from it," says Ann Pope, a mortgage consultant for Assured Mortgage Services in Toronto. "Because if they can wait even a couple of months, they can usually come up with the five percent themselves."

To read more about no-money-down mortgages, click here.

The interest-only mortgage
This plan is also pitched at people who don't have much money upfront but may be anticipating a windfall at a later stage in ownership of the home. In this situation, your monthly mortgage payments only settle interest charges.

"It won't drain your cash flow the way a principal-and-interest payment will," says Welbanks.

This is an attractive opportunity for people who want to earn income as landlords. They can purchase the house, begin to reap the benefits of being paid rent and write off the mortgage interest on their taxes (something you can't do on a principal residence).

Because you're only servicing the interest, however, you won't make a dent in the principal until you have the wherewithal to start making larger monthly payments.

The blend-and-extend mortgage
This option exists for people who are already in a fixed-term mortgage and want to take advantage of dropping rates. Let's say you're in the second year of a five-year fixed term at 6.5 percent and you notice that your lender is advertising a five-year rate to new customers of 5 percent.

Envious, you inform your lender that you want a piece of that action. The bank respects your loyalty, but would be foolish -- on a business level -- to set you up with a lower rate without some sort of recompense. First, they strike a compromise by "blending" the two interest rates -- to reach, say, 5.8 percent. This factors in both rates and still compensates the bank for its troubles.

And then there's the "extend" part. The deal requires you to take a term that's equal to or longer than your remaining mortgage commitment, which in our example is three years. This type of refinancing may prove more cost-effective than moving your mortgage to another lender and incurring a penalty -- or it may not. It would depend on the rate a different bank was ready to offer.

Andre Mayer is a freelance writer in Toronto.