The Best Mortgage Rates in Canada

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:

• Optional (a lender may choose to buy the insurance itself, even if you have 20%+ equity), or
• Mandatory (if you don’t have at least a 20% down payment, you need a “high-ratio” mortgage and must pay to insure your mortgage).

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:

• there’s less competition for $1 million+ mortgages (since only deposit-taking lenders can fund them)
• there’s no way to default insure them (since it’s prohibited on seven-figure homes), and
• there are fewer ways to raise capital for such “super-jumbo” mortgages.

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.

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. RATESDOTCA 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.