Mortgage Rates in Canada

Find the Best Mortgage Rates in Canada

There are few things in life as overwhelming as comparing the best mortgage rates. The decision to purchase a home comes with quite a few steps, such as choosing a fixed vs variable mortgage rate or determining the cost of borrowing.

As Canada’s mortgage rates fluctuate with the state of the housing market and recover from the pandemic, we remain dedicated to helping future borrowers find exclusive offers and the best Canadian mortgage rates.

How Does a Mortgage Work?

Before you spend an entire afternoon researching the mortgage rates in Canada, you probably want to know how a mortgage works. Essentially, a mortgage is a loan from a lender or mortgage broker, spanning the length of 25 years, agreeing to lend the borrower money in exchange for ownership of the property in question.

You, also known as The Borrower, will be asked to pay interest on that loan on top of your monthly mortgage payments. This interest is why there’s always such a buzz around the interest rate on mortgage loans. Lower rates equal lower interest paid.

When you compare mortgages, the interest rate is something in which you’ll pay very close attention. 

How to Get Pre-Approved for a Mortgage?

The pre-approval process for a mortgage loan is rather simple, though it can be time-consuming to wait on underwriters or gather your documentation. Knowing what you need beforehand will be immensely helpful.

A pre-approval letter will allow you to know the maximum amount you’ll qualify for and your potential payments. Most lenders will allow you to lock in your interest rate for 60 days, up to 120 days. Remember, the pre-approval does not guarantee you that loan amount.

The final amount of your mortgage depends on the value of your new home factoring in your downpayment. To apply for the pre-approval process, you’ll need to check your credit report for any errors, and provide your lender with:

  • Proof of employment
  • An accepted form of identification
  • Proof you can pay the closing costs and make your down payment
  • Information regarding your assets (car, boat, etc.)
  • Debt and financial obligation information such as child support or car loans and leases

How to Get the Best Mortgage Rates in Canada

As a prospective home buyer, you’re very interested in Canada’s mortgage interest rates. It’s not often that lenders will provide their best available mortgage interest rates, which affects your monthly payment. They can often go lower than the posted rates.

To lock in the best mortgage rate, you’ve got to compare the housing market in your area. We want you to skip the negotiations and get right to the point.

MoneyWizard has the inside information on current mortgage rates, connections to plenty of lenders, and willing to do the lender footwork for you. Let us save you thousands of dollars per year, and find you the best interest rates.

Frequently Asked Questions About Mortgage Rates

There are plenty of questions when discussing mortgage rates with potential home buyers. Here are a few of the most frequent:

What Mortgage Payment Amount Can I Afford?

Well, that depends on a few variables. Everyone that applies for a mortgage has different financial circumstances. However, lenders will base your payment on the following:

  • The amount you’re putting towards your down payment
  • Your Gross Debt Ratio, which is the amount of your monthly income that you’ll spend on housing expenses
  • Your Total Debt Service Ratio, or the amount of your income that goes to other financial obligations

What is the Difference Between an Open and Closed Mortgage?

Choosing between an open and closed mortgage will affect how you go about paying off your mortgage debt.

Closed Mortgage: Closed mortgages impose penalties, often steep, for paying off your mortgage early. However, it’s common for them to have lower interest rates.

Open Mortgage: Open mortgages allow the borrower to pay off the balance at any time, without penalty.

What Additional Expenses Should I Put in My Budget?

In addition to closing costs, borrowers should be ready to hand over some extra cash during a new home purchase. Plan on the additional expenditure in the form of land transfer fees, property taxes, renovations, home insurance, land transfer taxes, and home inspections.

What Credit Score Do I Need to Get a Mortgage?

In Canada, a credit score of 750 is superb. Your credit score might range from 300 to 900, and lenders typically require a score of 600-700. The higher the score, the better the chances of locking in the prime rate, but that rate can be withdrawn without notice.

What is an APR?

An annual percentage rate APR is a measure of the cost of borrowing money, broader than the interest rate. Your APR reflects your interest rate, mortgage lender or broker fees, and anything other charges you pay throughout the lending process.

What are the Current Mortgage Rates in Canada?

Mortgage rates tend to fluctuate. To lock in the best mortgage rate for your situation, you must check with more than one lender in your area. MoneyWizard can provide you with all the mortgage rates that you’ll need to pick the best lender. 

What is the Difference Between a Fixed vs Variable Mortgage

Choosing a fixed rate or variable rate mortgage is a decision you shouldn’t take lightly. MoneyWizard will get you a fantastic deal no matter what you want, but you should know the difference between them.

Fixed Mortgage Rate: When we talk about fixed mortgage rates, we mean that the interest rate remains the same through the applicable term of the loan.

Variable Mortgage Rates: A variable mortgage rate, also known as an adjustable-rate mortgage, is a mortgage loan where the interest rate periodically adjusts based on an index that reflects the cost to the lender.

How to Calculate Mortgage Payments

A preset mortgage payment calculator is the perfect way to figure out how much you’ll be paying on your new home loan. There are plenty of resources featuring a mortgage calculator that allows you to plug in the numbers and figure it out quickly.

There is a formula for calculating it by hand, but it’s easier to use a calculator, and the result is very accurate. That’s the best option when asking how to calculate a mortgage payment.

What is a Reverse Mortgage?

A reverse mortgage is a form of mortgage loan typically secured by a residential property, such as the home the borrower is living in. Reverse mortgages allow the borrower to access the value of the property. You’ll often see reverse mortgage loans targeting older homeowners, and they do not usually require a monthly payment.

What is Mortgage Insurance?

Mortgage insurance is an insurance policy that covers lenders for any loss due to default payments on a mortgage loan. It can be public or private. Many homeowners find themselves paying mortgage insurance (PMI) if their down payment is less than 20%, depending on the loan type.

Where Can I Get A Mortgage?

There are a variety of places to get a mortgage loan. First, know the difference between a lender and a broker, and go from there.

Mortgage Lender: A mortgage lender, which includes a wide range of companies such as banks and loan companies, lends money to future homeowners directly. 

Mortgage Broker: A mortgage broker does not lend money directly to the homebuyer, but arranges a transaction by finding a lender.

Some lenders refuse to work with mortgage brokers and prefer to fo business directly with the borrower. Mortgage brokers do have access to many lenders and are likely to provide a vast range of loan offers.

Locking in a Rate that Works for You

MoneyWizard is here to help with everything you need to get started in the mortgage pre-approval process. It can be mentally exhausting and time-consuming, but we can take the stress out of it by finding a rate that works with your financial requirements.

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