one year, then you are free - you can do whatever you want after one year without any penalty - such as switch bank, pay it off if you have enough money, etc. if you still want to stay with the same bank, you have to sign a new mortgage contract with the bank. 5 year means you have five year contract with bank with varible rate, you can not switch to other bank within 5 years or pay it off, most variable rate mortgage allows to switch to the fixed rate mortgage anytime within 5 years, but you are bound with this bank for 5 years before your mortgage contract expires.