All banks offer different rates when it comes to mortgages, depending on your credit score as well as your financial situation. Already having an account with a certain financial institution, or moving your accounts there, can also affect the rate you’re approved for. No matter who you choose, though, you want to ensure you get the best rate possible.
Bank of Canada Mortgage Rates
While the Bank of Canada doesn’t set its own mortgage rates, it does have a significant influence on them. When mortgage rates are given in Canada by banks, these rates are based on the Bank of Canada’s prime rate. Currently, the prime rate in Canada is 4.45%. Lenders then use this number to secure the best possible mortgage rates for you.
The Bank of Canada influences Canada’s prime rate based on the country’s policy rate. This prime rate is used to influence inflation and ensure it stays within its target range. Since inflation has been stabilizing lately, the prime interest rate is either staying the same or decreasing.
Another factor to consider that affects mortgage rates is the bond market, specifically bond yields. Banks use this, along with the prime rate, to set their mortgage rates.
What is the Easiest Bank to Get a Mortgage At?
There is a common misconception that mortgages are among the most difficult types of loans to get. In actuality, it is easier to get a mortgage than you may think. This is mostly because a mortgage is a secured loan. The lender can use the home as collateral, reducing their risk to a level much lower than that of a large unsecured loan.
That being said, the easiest bank to get a mortgage with is usually the one you already bank with. This is because they already have many of your accounts and want to do whatever it takes to keep your business. That said, it doesn’t guarantee you will be approved. You still have to meet the requirements to get a mortgage and fall within the proper debt-to-income ratio. This is usually 40% or under, but can be up to 50%, depending on the lender. Even if your current financial institution approves you, that does not guarantee that you will get the best mortgage rate.
Otherwise, another option is to go with a smaller or alternative lender. Sometimes, the big banks can be stricter about mortgage approvals. Smaller institutions like credit unions and online lenders can be easier to get mortgage approvals from, even if the interest rate is slightly higher.
What is the Best Bank for a Home Mortgage?
Picking who the best mortgage lenders are is going to be different for everyone. That said, a really popular bank for mortgages that always has great rates is Tangerine. You can apply online or by phone, but their rates start at 4.49%.
Big 6 Banks for Mortgages
When it comes to getting a mortgage, there are a few reasons why the top 6 banks are the first that a buyer will check with. This is because they can provide more competitive loan terms and significant discounts. Depending on the type of mortgage you are looking for, it will also make a difference in the bank that you choose.
RBC Royal Bank
In terms of fixed mortgage rates, RBC’s rates are quite competitive. They are one of the world’s largest banks and serve over 16 million customers. Offering some of the best fixed-rate mortgage rates helps keep them there. Fixed-rate mortgages are among the most popular types of mortgages, especially in a high-inflation economy.
With a fixed-rate mortgage with RBC, your rate can be guaranteed up to 120 days before the closing of a sale or 30 days before your renewal date. This guarantees your payments are locked in for the duration of the agreement, even before you finalize your mortgage.
The main reason buyers tend to prefer a fixed-rate mortgage is that nothing changes. Unlike a variable-rate mortgage, a fixed-rate mortgage keeps everything locked in for the duration of the term. There are no changes to your:
- Interest rate
- Amortization
- Principal amount
- Monthly payments
CIBC
While CIBC is also competitive when it comes to getting a mortgage, they are the recommended bank to contact if you need to refinance your mortgage. There are many reasons that you may choose to refinance, but the most common reason is to renew when your term ends. This is normally every 5 years, but it can be sooner depending on the term you signed for.
Refinancing can be confusing, but when you first get a mortgage, you are amortizing for a set period. This is usually 25 years, but the duration may vary depending on your individual situation. With that amortization period, you sign for a term at a certain interest rate. Once your CIBC mortgage term ends, then you have to renew for a new term based on the remaining amortization.
BMO
The Bank of Montreal (BMO) is the fourth-largest bank in Canada, with over 8 million customers. While RBC is known for its fixed-rate mortgages, BMO is recommended for variable-rate mortgages. This is because BMO variable mortgage payments don’t change. You still make the same monthly mortgage payments even if the interest rates rise; your principal-to-interest rate ratio just changes. The only time your monthly payment changes is if the interest payment exceeds the locked-in monthly payment.
TD Bank
TD’s mortgage specialty is collateral mortgages. These are sort of like readvanceable mortgages. This entitles you to take out the value, or a portion of the value, of your home if it is paid off, or if a portion of it is. This is based on approval, of course. They use the equity in your home as collateral against your line of credit.
Some perks to a normal mortgage from TD are that you can pick your payments as well as the length of the mortgage. This gives you a little more freedom and flexibility with your mortgage payments.
Scotiabank
The Bank of Nova Scotia, also known as Scotiabank, is the third largest bank and has over 11 million Canadian customers. As a large bank, it can offer a product called STEP (Scotia Total Equity Plan).
STEP allows you to use your home’s equity to borrow money. You can use a variety of lending options, such as:
- Mortgages
- Lines of credit
- Credit cards
- Personal loans
There is also a variety of other lending options available. The lending option chosen is based on your specific needs, and it’s just one application.
National Bank of Canada
The final of the major banks in Canada that offers mortgages is the National Bank of Canada. They offer a wide variety of financing options with a 3-year fixed-rate mortgage starting at just 5.04%. They also offer credit cards, loans, lines of credit, home equity loans and more.
Which is Better? TD or RBC for a Mortgage
When it comes to choosing a mortgage in Canada, both TD and RBC are great choices. However, when it comes to mortgage lenders in Canada, you need to pick the best fit for you. Every bank offers different prepayment privileges, mortgage rates, and loan terms, so determining which best fits your lifestyle is important.
How Do Mortgages Work?
Even though there are posted mortgage rates, they really just depend on your individual factors. While the rates may seem low, even percentage points make a difference since they’re compounded semiannually. The financing rate will also vary depending on whether you’re financing rental properties or your primary residence. Other things that make a difference include whether you get a conventional mortgage or an insured or uninsured mortgage. Your credit report, debt ratios, any existing mortgages, and home equity lines will make a difference.
When it comes to your monthly mortgage payment, it’s important to remember that this is only part of your monthly housing costs. You also have to think about property taxes and condo fees.
Differences Between Mortgages on New Purchases and Renewals
If you’re just purchasing a home and getting a new mortgage, you can use a mortgage expert to help you get the lowest mortgage rates. Mortgage brokers will compare rates for the big banks as well as other lenders to help you get the most affordable home financing. Most lenders will also try to secure competitive rates for you.
With Canada’s rate cuts last year, it’s becoming easier to find an affordable mortgage before your closing date. That said, your mortgage amount isn’t the only cost to consider. There are so closing costs and real estate lawyer fees to consider.
When you’re in the market for a mortgage renewal, the mortgage cost is all you have to consider. No matter what your mortgage amount is, looking at different mortgage options through different lenders can help you save money. Your current lender might not offer the best rate. It won’t cost you to switch lenders if you’re up for a renewal. If you’re not up for renewal, the bona fide sales clause in a closed mortgage will require you to pay a fee. However, a few lenders won’t require this clause.
Closed and Open Mortgages
We know there are different types of mortgages available based on the interest rates that you choose, but did you know that there are also open and closed mortgages? This affects how much money you can put into the principal.
Open mortgages allow you to put money down on the principal whenever you choose, on top of the down payment, without a penalty. Using this feature allows you to reduce the amount of money you put towards your overall interest and pay your mortgage early, either in installments or as a lump-sum payment.
Closed mortgages are different. With a closed mortgage, you are limited to when you can put extra money down on the principal. There is usually a certain amount allowed per year, and anything over that is subject to a penalty. That being said, a closed mortgage often has a lower interest rate than an open mortgage. Keep in mind that this type of mortgage is based on the finance term and not the amortization period. This means that if you get a closed mortgage you don’t like, you can refinance to an open mortgage.
Rates of the Top 6 Banks
Here are the current mortgage rates at the top 6 banks in Canada.
| Bank | 5-Year Variable | 5-Year Fixed | 3-Year Fixed |
| RBC | 4.150% (prime-0.30%) | 5.140% | 4.990% |
| TD | 4.29% (prime-0.31%) | 5.39% | 5.24% |
| CIBC | 4.20% | 4.99% | 5.09% |
| BMO | 4.10% | 4.99% | 4.94% |
| Scotiabank | 4.900% | 6.190% | 6.050% |
| National Bank of Canada | 5.04% | 5.14% | 5.04% |
Before you make any decisions regarding your mortgage, whether for rental and investment properties or residential mortgages, you should determine which bank suits your needs and what its rates are. A good way to do this without going to multiple lenders is to work with a mortgage broker. Mortgage brokers can find a mortgage that suits your needs and secure the best rate, whether with a top-6 bank, a regular bank, or a non-bank lender.
Mortgage Rates Based on Province
While mortgage rates in Canada are generally similar, the rate per province does depend on the competition in that province. That said, prime is the same across the country because it reflects the policy rate, so the rates won’t vary much.
- British Columbia – 4.59% for a 5-year fixed mortgage
- Alberta – 4.49% for a 5-year fixed mortgage
- Saskatchewan – 4.73% for a 5-year fixed mortgage
- Manitoba – 4.25% for a 5-year fixed mortgage
- Quebec – 4.44% for a 5-year fixed mortgage
- Ontario – 4.34% for a 5-year fixed mortgage
- Newfoundland and Labrador – 4.59% for a 5-year fixed mortgage
- Nova Scotia – 4.84% for a 5-year fixed mortgage
- PEI – 5.14% for a 5-year fixed mortgage
2 Year Variable Mortgage Rates
As you may have noticed, the shorter the mortgage term, the higher the interest rate. That said, variable-rate mortgages tend to have lower interest rates than fixed-rate mortgages. While all banks vary in what mortgage rates they offer, right now the rate for 2-year variable mortgages is sitting around 4.54%. However, as the prime rate in Canada changes, so will these rates.
Non-Bank Mortgage Lenders
If, for some reason, the banks aren’t approving you for a mortgage or you are looking for a non-bank alternative, don’t worry, you actually have a lot of options. There are plenty of non-bank lenders that give mortgages. Many of these non-bank mortgages are also offered by online Canadian mortgage lenders.
- First National
- Home Trust
- MCAP
- Street Capital
- Credit Unions
- Merix Financial
- Spring Financial
- Equity Financial Trust Company
These are just a few. There are actually so many more. No matter what kind of mortgage you are looking for, just because the large banks didn’t work out, don’t forget there are plenty of other financial institutions that might be willing to lend you what you need.
A and B Lenders in Canada
There are a few differences between A and B mortgage lenders. For starters, A lenders tend to fund those with higher credit scores and stable incomes. These lenders are federally regulated banks or provincially regulated credit unions. B Lenders, on the other hand, are quasi-regulated.
Most mortgages are funded by A lenders in Canada, including the top 6 banks. Over 27% of bank mortgages are funded by RBC alone. That being said, many homebuyers are turning to B lenders. There are a few reasons for this, such as having a lower credit score, being denied by larger banks, or simply choosing to use an alternative lender.
In some cases, using a B lender can actually save you some money. It all really depends on your individual circumstances and what the lender is willing to lend you. It also makes a difference in whether the B lender gives you an open or a closed mortgage.
Mortgage Insurance
When you’re looking into different mortgage products, an important thing to consider is whether you qualify for the Canada Mortgage and Housing Corporation’s mortgage default insurance. If you’re a first-time homeowner and purchasing a home under $1,500,000, you can qualify for this insurance, which allows you to make a down payment of less than 20%. However, having this insurance may affect the interest rate the bank offers you.
If you use mortgage default insurance, its recommended to have high credit scores to be approved. According to CMHC regulations, to pass the mortgage stress test, you need a minimum credit score of 600 to qualify and get a mortgage approval, along with other factors. However, if you go with an insured mortgage, some lenders may choose to approve you with bad credit; you just won’t get the most competitive interest rates.
Is a Mortgage Broker Better Than Going to a Bank?
Whether you choose a mortgage broker or a bank depends on what you’re looking for. Going through a mortgage broker channel gives you access to rates through both private lenders and traditional banks. They still take into consideration your credit profile and income verification before they can find you a lender.
When you go to a bank, you only have access to mortgages through their institution. This means that you might not get the best rate available to you. It also means you might not meet the lender’s minimum qualifying rate.
Are Monoline Lenders Safe to Use?
Monoline lenders are also known as well-established A lenders. They differ from traditional banks because they’re only available through mortgage brokers. They specialize in mortgages rather than offering other financial products.
Monoline lenders follow the same federal rules and guidelines as major banks, and they cater to prime borrowers. If you have a mortgage with one of these companies and it is acquired, your mortgage terms stay the same. Some of the most well-known monoline lenders are CMLS Financial, MCAP and First National.
Negotiating a Better Rate With Your Bank
If you’re up for a mortgage renewal and looking to negotiate a better rate, there are some things that you can do to help with the process. The first thing you should do is start shopping around 4 to 6 months before your mortgage term ends. During this time, there’s no prepayment penalty if you decide to switch lenders.
It’s important to remember that posted rates aren’t always the most competitive rates that banks can offer. When you get a quote for a mortgage rate, you can use this to negotiate a new rate with your current financial institution.
The Differences Between Posted and Discounted Rates
When you’re looking at rates from a bank or mortgage finance company, it’s important to remember that the posted rate is the rate posted online or sent to the Bank of Canada. The discounted rate is the actual rate on your mortgage contract. Borrowers who meet the qualification rules with mortgage companies will often get a rate that’s lower than the posted rate.
Which Lender is the Best for Self-Employed Borrowers?
When it comes to getting a mortgage, there are 3 different types of Canadian lenders: A Lenders, B Lenders and Private Lenders.
A Lenders are banks and monoline lenders, and are best for self-employed individuals with at least 2 years of T1 returns. You also need to have your NOAs showing sufficient annual net income.
B Lenders are alternative lenders, such as Equitable Bank or Home Trust. These are best for self-employed individuals who write off large sums of money to reduce their taxable income and have alternative income verification. They have higher borrowing costs, but they also offer flexible underwriting.
Private lenders and Mortgage Investment Corporations are great for those with limited income history and limited or damaged credit. These work as a short-term solution until qualification is available with an A or B lender.
Are Credit Unions Exempt from a Mortgage Stress Test?
Whether a credit union is exempt from a mortgage stress test depends on whether it’s provincially or federally regulated. Credit unions regulated at the provincial level are legally exempt from stress test requirements. That said, they can enforce their own stress test rules. Credit unions that are federally incorporated are federally regulated financial institutions and are required to comply with OSFI’s stress test rules.
How Bank Prepayment Privileges Compare to Monoline Lenders
While both chartered banks and monoline lenders offer annual large payments with no penalty, the amount that you’re able to pay varies. Monoline lenders typically allow annual payments between 15% and 20% of the original principal. Large banks offer prepayment privileges from 1% and 20%.
Instead of prepayments, both of these types of lenders also offer the ability to increase your mortgage payments up to 100% without a penalty. At the end of the mortgage term, you can pay the remaining principal with no penalty. You can also get mortgage loan insurance with both types of mortgages.
How Much Does a $300,000 Mortgage Cost in Canada?
How much a $300,000 mortgage will cost you depends on your amortization period as well as your mortgage rate. That said, standard monthly payments on a mortgage of this size are $1,595 to $1,810. This is with a 25-year amortization period and mortgage rates ranging from 4.10% to 5.39%.
Prepayment Privileges and Portability
| Bank | Prepayment Privileges |
| RBC | Up to 10% of the original principal amount once every 12 months. |
| TD Bank | Up to 15% of the original principal amount once per year. |
| Scotiabank | Between 10% and 20% of the original principal amount per year, depending on the product. |
| CIBC | Between 10% and 20% of the original principal amount per year, depending on the product. |
| BMO | Between 10% and 20% of the original principal amount per year, depending on the product. |
When it comes to the actual mortgage penalties, every bank will have its own based on your mortgage balance. To avoid the penalty fees on outstanding balances, you can port your mortgage. These banks offer interprovincial portability, except for TD, where it is less common.
Standard Vs. Collateral Charge Mortgages
The two most common mortgages in Canada are standard charge mortgages and collateral charge mortgages. Here’s a look at how each one works
Standard Charge Mortgages: These mortgages are registered for the exact principal amount of the loan. The terms of the mortgage are on title and easy to transfer to a new lender upon renewal.
Collateral Charge Mortgages: These mortgages are registered for between 100% and 125%. The specific details of the loan are kept on a separate master credit agreement and are more difficult to move to a different lender. A formal legal discharge and a new registration are required.
When Do Private Mortgages or MICs Make Sense?
When you are turned down for a mortgage by traditional Canadian lenders and mortgage providers, you can use private mortgages and MICs to purchase real estate. To find a reputable lender, you can speak to a licensed mortgage broker, even if you have non-traditional income and poor credit history.
Private mortgages and MICs are also great for:
- Stopping a foreclosure
- Bridging financing gaps
- Urgent closing timelines
Mortgage Options for Newcomers to Canada
As a newcomer to Canada, you can purchase a home with as little as 5% down and no credit history, even if you have no banking relationships. You’ll have access to competitive mortgage rates and flexible payment options. Which bank you get a mortgage with depends on your borrower profile.
While your risk tolerance is still important, there is more flexible criteria for a mortgage approval. Mortgage features will vary by mortgage, and your land transfer taxes will vary based on where you purchase.
Market Share of Canada’s Biggest Mortgage Lenders
The banks in Canada with branch access, known as the top 6 banks, hold approximately 75% to 78% of all outstanding mortgages for residential properties in Canada. Credit unions account for roughly 12% to 14% of residential mortgages. Mortgage Finance Companies hold roughly 5% to 9% in high-ratio mortgages. Private lenders hold roughly 1% of the mortgages.
