The best mortgage rates change almost weekly. And Rates.ca tracks them all.
But getting the true best mortgage rate isn’t as simple as it seems. That’s because, contrary to popular opinion, the best mortgage rate is often not the lowest mortgage rate.
The best mortgage rate is one that minimizes your overall borrowing costs. You can virtually never know that by merely looking at the rate itself. Prudent mortgage research entails more of a process.
It starts with finding the lowest mortgage rates for the most suitable term. That serves as your “shortlist” of mortgage options.
You can then review the conditions and features that apply to each rate until you find a mortgage that checks all your boxes.
Rates.ca makes it easy to do that. The page you’re on helps you compare current mortgage rates side by side. You can evaluate payments, rate holds and prepayment flexibility, and then visit each lender for more details.
As you look around this site, you’ll notice we have access to all of the most relevant lenders. That includes all the major banks, all top credit unions, all major mortgage finance companies and an array of top mortgage brokers. Shopping among them is quick, easy and—most importantly—free.
Rate Tip: Once you've chosen the rate(s) you're most interested in, click the <Get Rate> button to contact the lender or broker directly. Ask them all the questions you need in order to feel comfortable with their mortgage product and service level.
Be sure to spend some time at this and compare multiple mortgage rates. The cost savings of even a puny five-basis-point-cheaper rate can save you $700 over 60 months on a $300,000 mortgage.
On the other hand, the cheapest rates can often cost you more later due to unexpected fees or limitations. We’ll talk about that momentarily.
In the meantime, let’s have a look at what factors impact mortgage prices in Canada.
Before you start comparing mortgage rates, it’s key to remember that the best mortgage rates depend heavily on 10 factors:
Mortgages on refinances, for example, usually cost more than mortgages for purchases. That’s because refinances are deemed higher risk and because refinances cannot be default insured.
Jargon Buster: Default insurance protects the lender in case you don’t pay your mortgage. Insurance is either:
Mortgage rates can vary widely by term. Assuming you don’t accelerate your payments, the term (or contract period) will affect your interest cost more than any other single factor.
You want to choose a term that matches your tolerance for rate risk, first and foremost. You then want to consider your five-year plan. You wouldn’t get a five-year fixed if you only planned to stay in the home for a year, for example.
The lowest mortgage rates usually have prepayment penalties. That can’t be overstressed. You wouldn’t want to choose a five-year term, for example, if you planned to move or refinance in two years.
Your mortgage amount, as a percentage of your home value, is called your “loan-to-value,” or “LTV” as they say in the business.
This is a pivotal factor when shopping for mortgage rates. An LTV of 95%, for example, will get you a lower rate than an LTV of 80%, even though you have more equity with an 80% LTV mortgage. The reason is because mortgages with less than 20% equity must generally be default insured at the customer’s expense. That insurance protects the lender from losses and makes lending more economical. Hence, the lender can pass along lower rates to the borrower.
The bigger the mortgage, the more profitable the deal and often the better the rate.
Rate Tip: Use our Mortgage Calculator to figure out how much you can afford to borrow.
Home values under $1 million often fetch better rates. That’s because:
As a result, those loans cost incrementally more.
Rate Tip: Your home value is always confirmed with an appraisal or the lender’s automated valuation tool.
Generally, the longer a lender has to guarantee your rate, the more they charge.
If you close your mortgage in 30 days, for example, you’ll often find lower rates than if you close in 130 days. (130 days is typically the longest rate hold you can get from a national lender. 90-120 days is more common. “Quick close” specials are often limited to 30-day closes.)
The best mortgage rates are often for amortizations of 25 years or less. Lenders often add surcharges if you want a longer payback period, such as a 30-year amortization.
Many mortgage finance companies also have amortization minimums, like 15, 18 or 20 years. If you don’t meet their minimum, you can’t get their rates (unless you refinance, which may entail extra costs).
You’ll generally get better mortgage rates if you live in the property being financed. Non-owner-occupied properties, for example, tend to have higher rates due to the added risk to the lender. That’s especially true if they’re rented out.
As well, properties that are less liquid (like cottages) rarely qualify for the lowest rates due to potential resale risk if a customer defaults.
Where you live can have a major impact on your mortgage rate. The best mortgage rates in Toronto, for example, are usually lower than the best mortgage rates in Halifax.
That’s largely a function of the greater competition in a big market like Toronto. There are simply many more lenders serving that market and far more mortgage brokers, all vying for commissions on your business.
Naturally, the lowest rates are available only to qualified borrowers. If your credit isn’t so hot or you can’t prove enough income, you’ll need to deal with a non-prime lender.
Keep in mind, the mortgage rates you see here apply to borrowers with average to above-average qualifications only. Non-prime mortgage rates are quoted on a case-by-case basis and generally require that you use a mortgage broker.
Getting the best mortgage rates requires five main things:
1. A Good Credit Score
You will generally need a 680 to 720 FICO score or above. Your co-borrowers, if any, will also need good credit.
Like anything else, there are exceptions to this. But the more exceptions you require, the lower your chances of getting the best rate.
2. Clean Credit
Lenders want to see few, or no derogatory items on your credit report. One missed payment in three years might be okay; five missed payments are not, especially if they went to collections.
3. Provable Income
A lender will usually ask you to prove your full income with tax documents and/or employer pay stubs. You need a two-year history of any bonus income, commissions or part-time income.
4. Reasonable Debt Ratios
If your monthly housing and payment obligations are more than 44% of your gross monthly income, you’ll seldom get the best rates.
Moreover, your monthly housing costs (mortgage payment, property taxes, heat and half your condo fees) cannot be more than 39% of your gross monthly income. That 39% limit requires a 680+ credit score, by the way. Otherwise, it’s 35%.
Remember this as well. To qualify for the lowest mortgage rates, you’ll have to pass the federal government’s mortgage stress test. All that means is that the lender will calculate your debt ratios using an inflated interest rate. If the lender is offering you a 3.25% rate, for example, it might stress test you to see if you can afford payments at a 5.25% rate.
5. Sufficient Employment Tenure
If you just started your job, you may not qualify with some lenders. Many lenders prefer to see at least a one-year job history if you’re salaried. But again, there are exceptions for those who aren’t salaried.
It’s always easier to find the lowest mortgage rates than to find the lowest borrowing cost. That’s because lenders like to add “gotchyas” to their mortgage agreements. These are surprises that boost your cost of borrowing later. Here are four examples of such pitfalls:
These are some of the most-asked mortgage questions in Canada, as well as advice on finding the cheapest mortgage rates in Canada.
This page contains some of the most competitive rates in the nation. Search by mortgage type, amount and home value and the lowest rates that we track will appear for you instantly.
For the last few years, the best rates in Canada have usually been found online. That’s because internet-based lenders have been more competitive and often accept smaller profit margins. Even big banks are now joining the bandwagon with special pricing for online mortgage shoppers. Rates.ca tracks dozens of lenders and aggregates the best deals all in one place.
At the time this is being written, bond market prices imply one rate cut in 2020. Economists project a generally flat rate market this year with the consensus forecast for one rate cut at most. Of course, projections can change on a dime and often do, so don’t rely too heavily on such predictions.
The best default insured rates (for people with down payments less than 20%) are typically quoted by mortgage brokers. The best uninsured rates, especially for borrowers with less than 20% down payments, generally come from banks. Some of the most competitive conventional lenders are the new e-banks, which we display in our rate tables.
This Mortgage Payment Calculator shows you your payments and amortization for any rate(s) you find on this website. You can even assume lump-sum prepayments to estimate how much faster you’ll be able to pay down your loan.
Restricted mortgages (a.k.a. “low frills mortgages) have boomed in popularity the last five years. Lenders realize that consumers want the lowest rate, so they’ve tried to strip out features from their mortgages to get the pricing lower. For some borrowers who plan no financing changes for five years, low-frills mortgages may make sense. For most Canadians, the small rate savings isn’t worth the much higher potential costs after closing. Those costs can bite you if you break, port, increase or otherwise refinance before your mortgage maturity date. Hence, for the majority of homeowners, it’s worth the small premium for a “full-featured” mortgage
Generally, not. The lowest rates in Canada are typically offered on default insured mortgages. Those are for people who put down less than 20% on their home purchase. Low insured rates are also available to people who transfer their already-insured mortgage to a new lender. Those who put down 20% or more get conventional rates, which are usually (but not always) higher than insured rates. Occasionally, however, someone putting down 35% or more on a home purchase under $1 million can get great rates similar to high-ratio rates.